Eniro`s Annual Report 2010

Transcription

ANNUAL REPORT 2010
CONTENTS
1
Eniro in brief
34
Board of Directors’ Report
1
Year 2010
40
Consolidated Income Statement
2
Eniro regains its financial stability
41
Consolidated Balance Sheet
3
Results from operations
42
Changes in Group equity
4
Comments from the CEO
43
Consolidated cash flow statement
6
Business concept and Strategy
44
Parent Company Income Statement
7
Eniro’s history
45
Parent Company Balance sheet
8
From search engine to purchase engine
46
Changes in equity, Parent company
10
Business areas
47
Parent Company cash flow statement
12
Market
48
Accounting principles
14
Corporate responsibility
57
Notes
15
Organization
78
Quarterly summary
16
Corporate Governance 2010
78
Multi-year summary
22
The Board
80
Certification by the Board of Directors and the President
24
Group management
81
Audit report
28
The Share
82
Annual General Meeting 2011
30
Operative risks and risk management
83
Definitions
84
Addresses
FINANCIAL CALENDER 2011
FURTHER INFORMATION
April 29, 2011Interim report Jan–Mar 2011
April 29, 2011Annual General Meeting 2011
July 15, 2011Interim report Jan–Jun 2011
October 27, 2011 Interim report Jan–Sep 2011
For more information about Eniro, visit www.eniro.com
Contact: Eniro Investor Relations, tel: +46 8 553 310 00,
e-mail: [email protected]
ENIRO IN BRIEF
Eniro is a leading local search company in the Nordic market. Millions of users can easily find points of sale that have the
products and services they are interested in by using Eniro’s services. Advertisers can market themselves to consumers
and companies that are likely to buy and thus gain new customers and increased sales. Better searchability leads to
better business.
The information in Eniro’s databases is available through various distribution channels, Internet and mobile services,
printed directories and other publications, and directory assistance services and SMS services.
Eniro markets its products and services under well-known brands, including eniro.se, Gula Sidorna, Din Del and Eniro 118
118 in Sweden; gulesider.no, kvasir.no, Gule Sider and Gule Sider 1880 in Norway; krak.dk and eniro.dk in Denmark; and
Panorama Firm in Poland.
Eniro markets and sells advertising to more than 500,000 customers. Each year, the company’s around 2,000 sales
representatives contact an estimated 2.5 million existing and potential customers.
Eniro has approximately 3,900 employees and operations were during 2010 divided into the business areas
Directories Scandinavia, Voice Scandinavia and Finland/Poland.
Eniro has been listed on the OMX Nordic Exchange Stockholm since 2000. Headquarters are located in Stockholm.
YEAR 2010
The combination of high debt and declining revenues in the beginning of 2010 led to Eniro
– despite the company having undergone a rights issue the previous year – having a limited
operational and financial flexibility. During the summer of 2010 Eniro was forced to commence a
discussion with its lenders on conditions of the credit facilities. The Board for Eniro then formulated
an action plan based on three priorities:
1. Reduced debt
2. Focus on profitable operations
3. Commercial focus and continued cost-savings
ENIRO ANNUAL REPORT 2010
1
ENIRO REGAINS ITS FINANCIAL STABILITY
Eniro operates in a search market that is undergoing significant change as a result of small and medium-sized companies
moving away from printed advertising products to digital media. This change has led to reduced revenues for the directory
industry, so also for Eniro. It is a challenge for all search companies to develop their market and thus maintain advertising
revenues with good profitability. Eniro’s strategy has been to
adapt to the changed search behavior by developing attractive
search services and competitive product offerings online.
A long-term sustainable capital structure and financing had
thereby been secured.
Focus on profitable operations
The second priority entails focus on the continued evaluation of
all operations, products and services with consideration of their
contribution to the company’s earnings, with the implication
that unprofitable operations are terminated.
Eniro’s operations generate positive cash flow. As a result of
large and small, often strategically correct acquisitions, in combination with a historically generous dividend policy, the company has had high debts. Eniro has nevertheless always been
able to fulfill its amortization plans with good margins. With the
financial crisis, the view of financial risks was however changed, which drew attention to companies with high debt, and
the situation was made worse by the slowdown in operating
revenues during 2009 and 2010.
Eniro’s operations in offline and online in Finland did not reach
the desired market position and profitability. During the third
quarter, Eniro therefore divested certain assets within its offline
and online operations in Finland to Fonecta. Earlier in the year,
Eniro’s holding in Finland’s largest online community, Suomi24,
had been divested and in the fourth quarter, the Yritystele business-to-business search service and the local Finish directories, ETD, were closed down. The remaining operations in Eniro
Finland are since then completely focused on Voice.
During 2010, Eniro was not able to fulfill the released forecast
regarding development of operating income. This was in part the
result of a reduction in demand for printed directories, in combination with a low order intake at the beginning of the year. Coinciding
with a potential elevated tax cost in the Norwegian operations, the
risk for not meeting the loan conditions increased. The company
was therefore forced during the summer of 2010 to commence a
discussion on the loan conditions with the lending banks. An action plan was drafted with three priorities in order to regain initiative, create financial stability and continue to develop operations.
Johan Lindgren, with extensive experience of leading companies
in change, was chosen to be the right person to, in his capacity as
President and CEO, lead the work with the three priorities.
Also small operations, such as individual directories, will be
terminated if they do not meet profitability demands. Operations that lie outside the core operations will be sold or closed
down. As an example of this, Oreo, which is active within public
procurement and offers digital procurement systems, was divested during the fourth quarter..
An increased profitability focus also characterizes product development, which is focused on fewer projects with the potential to generate income in the near future.
Commercial focus and cost-savings
Reduced debt
The third priority is related to increasing the product range and
increasing sales efficiency in order to slow down the revenue
decline in 2011 and turn to growth in 2012.
After having evaluated possible options the Board proposed
strengthening the balance sheet through a guaranteed rights
offering of around 2.5 billion SEK. This was in the shareholders’ interest as it would reduce the financial risk and make it
possible for the new leadership to continue to implement the
strategy according to the established business plan. An Extraordinary General Meeting approved the proposal on 26 November
and the subscription period for the rights offering ran from 3 to
17 December 2010.
Through extensive investment on product development, a new
search service was launched in the later part of 2010. The work
is now directed towards sales and marketing of new customer
offers, while product development is maintained at an even
level. The sales forces for print and online were merged at
the beginning of the year and the organization has been adapted to increase the support to sales representatives in their
work.
The rights offering amount that was brought into the company
amounted to approximately 2.4 billion SEK after transaction
costs and was used in its entirety to reduce the company’s
loans. The Group’s debts, expressed as interest-bearing net
debt, was reduced by around 2.7 billion SEK and amounted
to SEK 3,951 M on December 31, 2010. In January 2011, an
agreement was entered into with the company’s lending
banks regarding the company’s financing until the end of 2014.
Efficiency initiatives have been undertaken within the entire
organization and the total operative cost base was reduced
during 2010 by SEK 435 M, excluding currency effects and for
comparative operations. Potential for further cost savings has
been identified and will entail continued cost reductions of SEK
200 M per year for 2011 and 2012.
2
RESULTS FROM OPERATIONS
• Operating revenues amounted to SEK 5,326 M (6,581)
• EBITDA amounted to SEK 605 M (1,807)
operations in Finland
• Rights issue of approximately 2.4 billion SEK after
• Net income was SEK -4,620 M (608)
transaction costs was implemented
• Net debt at December 31, 2010 amounted to
• Impairment of SEK 4,264 M, mainly attributed to
• Divesting and restructuring of online and offline
goodwill in the Norwegian operation
SEK 3,951 M (6,645)
• Operating cash flow amounted to SEK 151 M (1,153)
• The Board of Directors proposes no dividend for 2010
OPERATING REVENUES AND EBITDA MARGIN 2007–2010
OPERATING REVENUES PER SEGMENT 2009–2010
7,000
70
6,000
60
5,000
50
4,000
40
3,000
30
2,000
20
1,000
10
0
DIRECTORIES
SCANDINAVIA
VOICE
SCANDINAVIA
FINLAND/
POLAND
0
2007
OPERATING REVENUES, SEK M
EBITDA MARGIN, %
2008
2009
2010*
* Adjusted EBITDA, excluding restructuring costs and other items affecting
comparability, amounted to SEK 1,266 M.
0
1000
2000
3000
4000
5000
2010
2009
FINANCIAL TARGETS 2011 AND 2012
OPERATING REVENUES
For 2011, a single-digit organic revenue decline is expected. A turn around to organic revenue growth is expected in 2012.
COSTS
The total net cost reduction in 2011 is expected to be SEK 200 M compared to the cost base in 2010, excluding the effects from
the divestments and restructuring of the online and offline activities in Finland. In 2012, total costs are estimated to be SEK 200 M
lower compared to the total costs in 2011.
CAPITAL STRUCTURE
The target is a net debt in relation to EBITDA not exceeding a multiple of three.
DIVIDEND
Priority will be assigned to the reduction of net debt in accordance with the net debt/EBITDA target.
3
COMMENTS FROM THE CEO
2010 was a difficult year for Eniro, with a significant decrease in revenues and earnings. At the end of
the year, a rights issue was successfully concluded. Now that long-term financing has been secured
we can give our full attention to turning the negative revenue development around and be best at
local commercial search services.
In September 2010, I took the position as CEO for Eniro, which
was then in a very difficult position. Revenues had declined
more than expected and the company risked not being able
to cope with the imposed lenders conditions on an interestbearing net debt in relation to EBITDA. Fully aware of the high
debt in relation to the company’s size, I took on the task because I saw a company with a strong market position, wellknown brands, many customers and loyal employees, present
on a growing search market.
Eniro’s business concept – to connect buyers and sellers, regardless of the media – is a profitable business, which generates significant customer value and benefit for consumers.
Eniro’s position as a leading local search company creates good
conditions for developing business in a market that is growing
in both the Nordic countries and in Poland. The company’s significant debt has historical reasons and the financial problems
have never been a question of lack of liquidity – on the contrary,
Eniro continues to have positive cash flows and has been able
to keep up a high amortization rate.
Despite this, work with the company’s long-term financing
dominated the last months of 2010. Raising capital was deemed necessary and in the end of October, the Board proposed a rights issue of 2.5 billion SEK in order to reduce debts,
strengthen the balance sheet and secure sustainable financing.
The rights issue was fully subscribed. Of the shares offered,
about 79 percent were subscribed with subscription rights,
about 2 percent by people who signed up for subscription
without subscription rights and the remaining approximately
19 percent were allotted the so called sub-underwriters,
institutional and private investors who guaranteed part of the
rights issue.
It is gratifying to see that the rights issue was fully subscribed
and that the ownership structure was renewed without the
lending banks having to fulfill their guaranteed commitments.
It is encouraging that Eniro is currently owned by institutional
and private investors who have taken an active investment decision. Now it is our responsibility to deliver results that live up
to expectations.
a larger part of the media consumption occurs via digital media. To meet the decrease in revenues, an action plan for reducing the operative costs was implemented. Unprofitable
entities were terminated and an overall overview was made to
adapt activities to the new conditions. The operative cost base
was reduced by SEK 435 M, which surpassed our targets. The
number of employees and consultants are aligned to the size
of the operations, while the pace of activities within product
development, after two intensive years, has been reduced to
a sustainable level.
EBITDA decreased to SEK 605 M, as a result of weak revenues
and negative impact of a one-time effect of SEK -626 M as a
result of divestments or restructuring of operations in Finland.
Adjusted EBITDA, excluding restructuring costs and other items
affecting comparability, decreased by 32 percent compared
with the previous year. Eniro showed a substantial loss for the
year, net income was SEK -4,620 M, as a result of impairment
of intangible assets amounting SEK 4,261 M, primarily relating
to the Norwegian operations. However, we generated a positive
operating cash flow of SEK 151 M, negatively affected by onetime effects related to the refinancing of SEK 256 M.
Forward-looking activities
The rights issue enabled us to secure long-term financing with
new loan agreements that extend to the end of 2014. We can
therefore put the discussion of financing behind us and completely focus on developing operations in order to be best in
local commercial search services.
Strategy remains intact
Eniro’s strategy is to be a leader within local commercial search.
By local search we mean the combination of breath in global
digital technology and depth in local knowledge; being either
local information or global information with local relevance. Local search leads to purchases more often compared with global
search and places higher demand on information being current
and correct.
Operating revenues for 2010 reduced organically by 14 percent.
The decrease was in line with our guidance to the capital market but highlights the fact that Eniro has not fully succeeded
in adapting activities to the changed search behavior, where
In order to meet the changed search behavior we are developing opportunities online. Over and above search advertising
we will have a broad offering online, with advertising developed in-house as well as advertising via partnerships. The challenge for us is to give users relevant search services and to
give customers a range of attractive advertising possibilities,
which produce search hits from consumers who are willing to-
4
The past year
My ambition is that Eniro will be able to offer a good media mix
in all the channels where advertisers wish to reach their customers. With our brands as starting point, we will present a broader
product offering, for example new advertisement formats, videos
and development of homepages. In order to broaden our offering, we may enter partnerships, which long-term could mean a
stronger revenue base but also lower margins.
A number of activities and actions have been initiated to increase
efficiency in Eniro’s sales. Over and above the sales channels we
currently use, we will better utilize under-used channels such as
customer service, letters and SMS. Eniro’s already strong sales
culture will be strengthened to meet customer demands. Our
professional sales force will be given the best opportunities to carry
out their work, with support from the rest of the organization.
The organizational structure has been aligned with a focus on
land-based sales organizations in order to clarify the responsibility for revenue generation and cost control. Measures include
further centralization of product development and business
support, greater focus on customer-oriented delivery management
and complement the finance function with specific responsibility
for monitoring and controlling of the transition of the business..
buy, which in the end generates business. Our search services
are compatible with iPhone, Android and other smartphones,
opening the door to entirely new services. A leading position
within online and mobile services is a prerequisite to be competitive within local search advertising, given that the amount
of advertising companies’ advertising investments within mobile solutions is predicted to increase substantially.
Just as our industry colleagues in the world’s search and media
markets, we find ourselves in a process of change as the result
of going from print to digital media, which means a significant
transformation of our business to being more relevant, as well as
needing to strengthen our customer relationships and introduce
a more efficient cost structure. The conversion is necessary for
Eniro’s future, while at the same time being a real challenge to
implement the transformation with maintained revenues.
Printed directories are still an important revenue source for
Eniro and we will continue to publish directories as long as
there is a customer and user demand and as long as each
publication meets our profitability requirements. All operations,
products and services are reviewed with regard to their contribution to company performance and unprofitable operations
will be terminated..
More efficient sales and expanded offering
Our goal is to slow down the decline in sales in 2011 and to return
to growth in 2012. The key to turning around Eniro’s development
lies in more attractive core services, a broader offer and more
effective sales.
For the current year, we have put forward a business plan to
capitalize on the investments made in product development in
recent years. The new versions of eniro.se and gulesider.no have
been well received by our customers. We work continously to
increase the attractiveness of our core services and thus promote continued high usage and thereby securing good return on
investment for our customers.
Positive start in 2011
In January 2011, we saw the sales start of the new search services
that have been launched on the Swedish and Norwegian markets.
The preparations have been thorough, the sales representatives
were able to start its activities as planned and we have received
positive feedback from our customers. It should however be remembered that a large part of the revenues for 2011, about 40
percent was sold during 2010 at lower values compared to the
previous year. The sales cycle from sales opportunity to revenue
recognition is about six months, which gives us good visibility, but
also a corresponding retardation of the measures we are implementing. All in all, the measures we are implementing are estimated to result in a single-digit organic revenue decline during the
second half of the year.
In conclusion, I see good opportunities for Eniro in the coming
years. Market conditions are better than they have been in recent
years, with strong economic conditions and growing advertising
markets in the Nordic region and Poland. Eniro has important
strengths in the form of a strong market position, a unique database, well-known brands, new search services at the forefront
of development, and a large customer base. In addition, we are
working hard to broaden our product range and to streamline
sales by new sales channels and an organization with more commercial focus.
Finally, I would like to thank all shareholders who participated in
the rights offering, all customers, and all employees who, despite
a turbulent year, have continued to make great efforts. We can
only gain competitive trust by continuously delivering according
to expectations. It will require much contribution over the coming year, and I look forward to jointly implementing our plan to
become the best in local commercial search services
Johan Lindgren
President and CEO
5
BUSINESS CONCEPT AND STRATEGY
Eniro has a unique database linking buyers and sellers and
making it easy to search regardless of distribution channel.
The development of new and improved products and services
is at the core of its strategy to achieve its vision to be the first
choice for local search.
Eniro offers local search and directory services. Revenues are
derived from customers who pay for adverts that are published and distributed in distribution channels online, printed
products, directory assistance and mobile services.
Main strengths
Eniro’s position as a leading local search company in the
Nordic market is based on a number of strengths that together create good conditions for Eniro’s ability to meet its
objectives and meet future challenges.
Unique databases. Over the years, Eniro has invested significant resources in developing its databases with commercially
relevant information about companies in markets in which
Eniro is active. The information gives Eniro a key competitive advantage while raising entry barriers for other search
companies. Databases are updated daily, allowing users to get
relevant hits with up-to-date information.
Large sales force. Eniro has a sales force of approximately
2,000 sales representatives, who have developed long-term
relationships with their customers. Eniro devotes significant
resources in training its sales force. To increase efficiency
and provide customers with high skills, parts of the sales organization are focused on a particular brand and/or search
service. A number of efficiency measures were introduced in
early 2011, among which are focused sales teams dedicated to
potential customers, to regaining lost customers, or for media
devices and mobile services.
Diversified customer base. Eniro brings together more than
500,000 customers with users. The client base consists of
companies of different sizes, operating in different industries
and geographic areas, and this diversification makes Eniro
less vulnerable to changes in specific industries or regions.
Leading marketing tool for local companies. Eniro enables
local companies to reach a wide, local audience, willing to buy;
while global competitors have focused on general searches
instead of locally tailored services. The local sales force also
enables Eniro to maintain a close relationship with local companies in their respective markets.
Strategy
Eniro’s vision is to be the first choice for local searches. The
ambition is to maintain Eniro’s strong market position while
managing the transition from print products to online search.
To meet the changing search behavior Eniro has developed its
databases and services to enhance relevance for users and
improved searchability for customers. The goal is to increase
profitability by continually developing its value-adding offerings and revenue model from providing valuable information
to generating transactions.
A number of initiatives and actions have been carried out to
achieve this vision.
Eniro is focusing on increasing the attractiveness of its core
services. The new versions of search engines eniro.se in Sweden and gulesider.no in Norway represent a significant improvement of the customer offer. The new platform enables
improved products and services and adds up to an expanded
offering. Sales of new advertising formats started in Sweden
and Norway in January 2011 and will start in Denmark in the
third quarter of 2011.
The effectiveness of sales has increased by sales representatives starting to use hitherto under-utilized distribution
channels such as email, SMS and letters. To achieve the most
effective mix of communication links, elaborate customer
segmentation has been initiated. The number of sales leads
per customer will also increase.
Additional potential to increase efficiency in order to implement cost savings has been identified. Profitability of individual products is continuously evaluated to maximize the contribution to the company’s earnings, cash flow and customer
satisfaction.
Product innovation. A major strength is the ability to develop
innovative products and services and to quickly adapt to user
preferences. A successful product development has been key
to successfully maintaining Eniro’s strong market position.
Well-known brands. Eniro’s brands is an important asset.
According to a survey conducted by Mind Research in June
2010, Eniro’s brands have the following brand recognition:
Eniro (Sweden) 97 percent, Gule Sider (Norway) 94 percent,
Krak (Denmark) 95 percent.
6
ENIRO’S HISTORY
Eniro was formed through a spin-off of Telia’s
(now Telia Sonera’s) operations for directories
and was listed on the Stockholm Stock Exchange
in 2000. But Eniro’s history dates back to the
1880s when the first Norwegian Telephone
Directory was published by the Norwegian Telecommunications Administration (now Telenor).
The Royal Telegraph Agency published the first
Swedish telephone directory in 1889, issuing a
couple of hundred copies.
The first version of the Swedish yellow pages, Gula Sidorna,
was published in 1978 by the Telecommunications Authority
(Televerket) and the U.S. conglomerate ITT.The first online version,
gulasidorna.se, was launched in 1996 and Eniro was first of the
European directory companies to offer mobile location servces.
In the early 1990s, Televerket formed a separate directory unit
and entered the markets in several European contries, through
acquisitions and the introduction of directories. At the time of
the initial public offering, Eniro had presence not only in Sweden
but also in Denmark, Finland, Estonia, Latvia, Lithuania, Russia,
Belarus, Ukraine and Germany. As an independent company,
Eniro had a clear strategy to grow in new markets.
International expansion
Shortly after the IPO , a major expansion in northern Europe was
initiated through the acquisition of related directory, Internet,
and directory assistance companies. Among the first acquisitions was the search company Windhager and the businessto-business company Wer Liefert Was? in Germany. Other early
acquisitions were the purchase of the Yellow Pages of Moscow
and of Poland’s leading directory company, Panorama Polska.
Eniro also acquired the directory operations of the Finnish company Elisa Oy, Finland’s second largest directory company and
market leader in directory assistance.
Through the acquisition of Scandinavia Online, which owned
the web portal Passagen and the search engine Evreka, Eniro
got access to IT infrastructure and skills within IT applications
and search functionality. An integrated search service in all
the Nordic countries (eniro.se, eniro.no, eniro.fi and eniro.dk)
was launched in 2003. In the same year, Eniro acquired the
company Respons, which ran the leading Swedish directory
assistance 118 118, and a number of directory assistance services in Finland.
Search companies with focus on Nordic countries
made possible by seeking a leadership position and being
the largest directory on these markets. The acquisition of the
Swedish company Gula Tidningen allowed Eniro to strengthen
its position in classifieds. In 2005, the company acquired the
leading Norwegian search company Findexa, which similarly
to Eniro had its origin in the national telephone company
(Telenor). Eniro also acquired a number of directory services
in Finland and sold its operations in Estonia, Latvia, Lithuania,
Russia and Belarus.
In late 2006, Eniro launched an updated version of the search
engines eniro.se, eniro.no, eniro.fi and eniro.dk. In 2007 and
2008, Eniro reached a leading position in online services on
the Danish market through the acquisition of the leading Danish search engine Krak. At the same time Eniro expanded its
distribution channels by partnering with other media companies. The remaining German business Wer Liefert Was? was
sold in 2007 and Eniro had by then achieved a clear position
as the leading Nordic search company.
Online development and efficiency
A phase of intensive product development and restructuring of
operations then followed as a result of the transition by users
from print to digital media. With the focus on local commercial
search, the aim was to go from the bulk of revenues deriving
from print products to developing online opportunities.
At the same time, the company was reorganized from a holding
company structure to a corporate structure, which included
streamlining the Group-wide functions. New business areas
were Directories Scandinavia, Voice Scandinavia and Finland/
Poland. Eniro introduced package sales, which means that all
advertisers are visible both in the directories and online, and
the previously separate sales forces for offline and online were
merged into a joint sales organization designed to strengthen
customer relationships and increase efficiency in sales.
The Finnish offline and online businesses were divested or
closed down in 2010 because they had not achieved the desired market position and not shown consistent profitability.
Following these measures Eniro is focused on Voice in Finland
and the remaining operations are included in the segment
Voice Scandinavia as of 2011.
During 2010 a big step was taken to Eniro’s vision to be the
best in local search. A new version of eniro.se with product
search functionality was launched in Sweden and shortly thereafter a new version of gulesider.no in Norway was launched
with the same functionality. In conjunction with the launch of
the new service, Eniro changed its corporate image to signal
the focus on online and the dynamics that Eniro creates when
buyers meet sellers.
In 2004, a strategic decision was made to focus operations
on the Nordic countries and Poland. Economies of scale were
7
FROM SEARCH ENGINE TO PURCHASE ENGINE
In 2010, a new version of eniro.se was launched in
Sweden and in 2011 gulesider.no in Norway was
launched with the same functionality. Eniro’s new
online service are neither a search engine nor a
price comparison site, but can best be described as
a purchase engine.
In addition to improved functionality and new design, the biggest change with the new versions of eniro.se and gulesider.
no is that users can now easily find the companies that sell
a specific product or service. For the customers, the change
means better and more specific searchability, which in turn
leads to more contacts and business.
Local information about the wide range
The biggest news are the new method to collect information
from customers and the underlying search algorithm that provides relevant results when searching for products and services.
No other online service allows users to find points of purchase
as easily for an equally wide range of products and services.
Broader customer offering
The new platform enables enhanced advertising opportunities
and adds up to an expanded offering. In October, the service
was introduced as a mobile application for both iPhone and
Android as well as a customized service for mobile Internet.
The new advertising format went on sale in Sweden and
Norway in January 2011 and will go on sale in Denmark from
the third quarter of 2011 after launching the product search
functionality on krak.dk.
Search for products and services is increasing
After the launch of the new version of eniro.se in September
2010, search results for businesses and points of purchase
increased by about 40 percent, measured as number of side
impressions. At the same time, a change in search behavior
was noticed whereby more and more people make searches
by entering the products and services they want to buy instead of entering the company name or industry. On eniro.se,
an increasing proportion of users search for products, companies and categories.
The starting point in the development of new versions was to
strengthen services in the area in which Eniro already has a
strong position – to generate business for customers and deliver relevant results to users searching for where a product or
service can be purchased. The existing database was expanded
with more information about products and services. Thus, local
information in Eniro’s own database was combined with additional data on companies and their products and services.
WHAT IS LOCAL SEARCH?
Developed to meet customer needs
Local search more often provides leads to purchases as compared to
global search. Greater demands are placed on the information being
relevant, accurate and current.
One of the aims of the new service was to create more business for customers through increased searchability. The idea
is that customers should be more active in their marketing,
which also offers greater benefit to the users. The service includes much more companies and points of purchase than
ever before, which means the number of relevant hits increases. At the same time, the quality, scope, and depth of the
database is continuously being enhanced by users submitting
suggestions for improvement.
It is often easier to find something on the other side of the world than
on the other side of the street. As a user, you want relevant results.
Advertisers want to attract local customers. Most of us spend most of
our money close to where we live and work.
The development work included user testing to test the concept and ease of use. The new online services are still good
sites to search for names or phone numbers, but in addition
you can now easily find where to buy a specific product or
service and you can also book a hotel or restaurant table
directly using the service.
8
SEARCH FOR YOGA PRIVATE LESSONS IN STOCKHOLM
Product search functionality allows users
to search for the specific product or service
they are looking for directly in the search
field. Most relevant companies are ranked
highest and placed first in the hit list.
ENIRO’S MODEL FOR RELEVANT HITS
INFORMATION
2
3
CUSTOMER INTERFACE
CRAWLING
1
KEYWORDS
BASIC INFORMATION
1 Basic information
2 Crawling of commercially relevant
company websites
3 Information from product files
4 Keywords per industry
5 Customer interface where customers
add information
4 5
The new search services gather all the
information in one place. Eniro’s database
contains basic information such as company
names, phone numbers, addresses, websites
and industries. In addition, Eniro collects
information from commercially relevant company websites in Sweden and Norway as well
as information from product files, which are
the same sources as price comparison sites
use. For each industry, relevant keywords are
also added, and customers can add their own
search words from a particular user interface,
thus affecting searchability and rankings.
9
BUSINESS AREAS
Eniro’s search services include channels online,
printed products, mobile services and directory assistance services and are marketed in
Sweden, Norway, Denmark and Poland. Group
revenues were during 2010 divided into three
business areas: Directories Scandinavia, Voice
Scandinavia and Finland/Poland. From 2011,
Eniro’s remaining operations in Finland will be
reported in the segment Voice Scandinavia.
REVENUE DISTRIBUTION 2010
17%
13%
70%
Directories Scandinavia
Directories Scandinavia covers all search engines in channels online, printed products and mobile services in Sweden,
Norway and Denmark. Directories Scandinavia contributed
to about 70 percent of total operating revenues for 2010.
Of operating revenues around 52 percent was reported in
accordance with the deferral method*) (online), around
37 percent was reported in accordance with the publication
method*) (offline) and around 11 percent was other products.
Through local search services Eniro sells various types of information pages to their customers. The ads are usually sold
as subscriptions based on an annual subscription fee. Information pages are sold per insertion and for a given period of
time. The price consists of a basic price, and increases depending on the amount and type of information included on the
page, such as searchable headings, search words, amount of
text and images. A majority of Eniro’s online revenues comes
from these types of ads. Online distribution is accomplished
by eniro.se, emfas.se, dindel.se, bilweb.se, leta.se in Sweden;
gulesider.no, telefonkatalogen.no, kvasir.no, sol.no and proff.
no in Norway; krak.dk, eniro.dk and sol.dk in Denmark.
Eniro’s printed products consist of directories and other printed media, including books of maps and specific guides. The
company annually publishes and distributes about 700 editions of regional and local directories accumulating to around
20 million copies. The regional and local directories include
Gula Sidorna, Gula Sidorna–På väg and Din Del in Sweden;
Gule Sider, Telefonkatalogen, Ditt Distrikt, Din Bydel and Proff
i Norge, and Mostrum Vejviser and Eniro local directories in
Denmark.
Voice Scandinavia
Finland/Poland
Eniro offers additional ways to reach their target audiences.
Display advertising means customers buy an ad space for
a certain period. The ads are usually linked to a number of
search words and displayed to users searching for those
words, but there are also ads that appear for all users. Sponsored links are displayed next to search results and contribute
more traffic to corporate websites. The sponsored link is displayed when someone searches for the words chosen by the
customer. Eniro charges per “click” on the link.
The new versions of eniro.se and gulesider.no, which were
launched in Sweden and Norway, permit Eniro to provide a new
range of improved products and services. The new online service offers ad format that is intended both for small and medium-sized businesses and larger companies and media buyers.
By continued launches equivalent mobile services will also be
offered in all three countries.
User-written reviews have become an increasingly important
part of consumer purchase decision making when purchasing goods or services. Eniro has launched rejta.se in Sweden,
dehitter.dk in Denmark and anbefallt.no in Norway, where
users contribute information themselves and also partake of
ratings and reviews from other users.
In Norway, the use of Gule Sider annually amounts to about
38 percent, according to TNS Gallup, Consumers & Media. A
survey by TNS SIFO indicates that 58 percent of Swedes use
the yellow pages at least once a year and 36 percent do it
every month.
*) Principles for revenue distribution are described on page 52.
10
Voice Scandinavia
Finland/Poland
Voice Scandinavia includes directory assistance services via
phone and SMS in Sweden, Norway and Finland. In 2010,
Eniro managed around 50 million calls and text messages.
Voice Scandinavia contributed about 13 percent of operating
revenues for 2010.
Finland/Poland covers all operations in Finland and Poland.
Finland/Poland contributed about 17 percent of operating
revenues for 2010.
Voice Scandinavia offers personalized search services via phone and SMS. Users pay for the services and Eniro gets revenue
per call or text message. Eniro offers directory assistance and
personal search services by Eniro 118 118, Eniro 118 119 and
Eniro 118 118 SMS in Sweden and Gule Sider 1880 in Norway.
In Sweden, Eniro 118 118 is a market leading player in directory
assistance. The Swedish operation has gradually been focused
in fewer places, and now operates from four locations in
Sweden. In Norway, Eniro offers voice services from a challenger position.
In recent years the number of calls received has decreased,
mainly due to increased competition and fewer requests for
standard directory assistance such as information on names
and numbers, which is easily accessible via the Internet. The
trend toward more advanced personal search is positive. Eniro
has further refined its voice services to offer a personalized
search service that encourages greater use.
In 2008, Eniro’s product portfolio in Sweden and launched
Answer Service, through which Eniro handling switchboard
calls to major companies in Sweden.
Eniro’s Finnish activities within offline and online were divested or closed down in 2010 because they have not achieved the desired market position and did not show consistent
profitability.
During the second quarter Eniro divested its holdings in
Finland’s largest online community, Suomi24 (S24). During the
third quarter Eniro divested certain assets in the offline and
online operations at Eniro Finland Oy Fonecta Ltd.; databases for Helsinki and Pirkanmaa and online services (Business
to Consumer) including the domain name eniro.fi. During the
fourth quarter, the business-to-business search engine Yritystele was sold to Bisnode and local telephone directories, ETD,
were shut down.
As a result of these measures Eniro is now solely focused on
Voice in Finland. This operation comprises directory assistance and call center. The call center handles both services for
incoming and outgoing calls, which includes both customer
service and telemarketing. As of the first quarter of 2011, the
Finnish operations, which in 2010 had revenues of SEK 291 M,
will be included in the segment Voice Scandinavia.
Eniro holds a strong position in the printed products in Poland
and with its regional directory Panorama Firm has about half
of the directory market. Eniro is also currently present in the
online search service pf.pl, which also is available as a mobile
service. The market for online services is however, not as well
developed in Poland as it is in the Scandinavian countries.
Internet use by the population is generally lower, while the
usage of those who have access to mobile Internet is the highest in Europe. Eniro does not offer package sales in Poland,
but sells exposure in directories and online separately.
FIGURES ABOUT ENIRO
•
Eniro’s internet services have in total about 1 billion user
sessions per year
•
For its customers in Sweden and Norway Eniro generates a
transaction value of about 250 billion SEK per year (TNS SIFO)
•
Each day Eniro deals with about 11,000 customer contacts
11
MARKET
The search market is based on the needs of
individuals and companies to find companies
from which they can buy the goods and services
they are looking for. Companies pay for various
forms of advertising to make them searchable
and to attract new business. Search companies
provide different kinds of advertising channels.
Growing market in rapid change
The total search market in Scandinavia and Poland is growing
while the use of printed products is declining. As a result of
changed user behavior an increasing share of the advertising
expenditure is transferred from print products to equivalent
online services. Search companies have addressed the change
in the market by developing online and mobile services and also
by continuing to develop directory assistance services.
The search markets in Sweden, Norway and Denmark are
expected to show average annual growth rates of 5 percent,
7 percent and 3 percent in the period 2009–2014 according
to BIA/Kelsey.
From print to online
The printed products are still attractive marketing tools for
advertisers, with its high reach, long life and users who are
willing to buy, as compared to other print media. Directories
often provide advertisers with a good return on their advertising investment. This means that they are expected to play
an important role for the foreseeable future. Nevertheless,
growth in online is partly at the expense of printed products.
BIA/Kelsey estimates that ad revenue from printed products
in Scandinavia will be reduced by an average 11 percent per
year from 2009 to 2014, while revenues from online advertising in search media is estimated to increase by an average of
14 percent over the same period.
The Scandinavian countries are expected to have a rapid growth
in online up to 2014. BIA/Kelsey estimates that the segment for
online services in Sweden will grow by an average of 16 percent
per year while in Norway it is expected to grow by about 14 percent per year and in Denmark with about 12 percent per year.
The market in Poland is expected to increase by 20 percent.
Of the aggregate market for local search in Scandinavia, 78 percent is estimated to be revenues from online services in 2014,
compared to 51 percent in 2009.
12
Internet fastest growing advertising media
Internet’s share of the search market continues to grow. The
transformation from print to online has come the furthest in
the Nordic countries, which lead the world in terms of Internet
usage, the proportion of households with broadband connections and the number of cell phone subscriptions per capita.
The largest part of the market for Internet advertising consists
of display advertising and search marketing. According to IRM,
display advertising and search marketing account for about
70 percent of the total Internet advertising market in Sweden.
With the development of search engines and their use, search
marketing has come to play a central role in Internet advertising. Search engines have traditionally dominated search
advertising. Today, the sale of search advertising brings in
almost as much revenue in Sweden as display advertising.
Mobile advertising is expected to increase
Cell phone penetration in the markets in which Eniro is present
is high overall and virtually everyone has access to cell phones. The use of smartphones and the amount of data now being moved to mobile networks is increasing rapidly. According
to Mediavision, around 2 million Swedes have a smartphone
today.
As cell phones become more advanced, user behavior changes.
Cell phones are increasingly being used to search the Internet
from places where previously there was no Internet access.
As a result, the search for goods and services via cell phone is
expected to increase. The share of advertising companies’ ad
investments in mobile solutions is expected to increase sharply
in the coming years. A leading position in online and mobile
services is therefore essential to be competitive in local search
advertising. Eniro provides mobile search services in Scandinavia, which allows search directly in cell phone, through applications for smartphones, mobile Internet solutions, and also
through SMS services.
Reduced volume in voice services
The activities of directory assistance are influenced by the fact
that more and more people are seeking information online and
via their cell phones, which means that the number of calls
about telephone numbers and names is decreasing. Product
development is a success factor also in voice services. The development of the voice industry is expected to move toward
more personalized services, for example, providing information
on good restaurants and booking tables.
Competition and industry colleagues
Both the markets for online and printed products are characterized by high competition. For the printed products it is mainly
in the form of substitute competition, that is, when one search
channel gains users and advertising from another search channel. Eniro’s printed products compete with other directories and
other printed forms of advertising activities including traditional media such as newspapers, radio, television and outdoor
advertising and direct marketing.
Eniro has a high market share in the Scandinavian and Polish
markets. Competitors range from major global players to smaller, local companies, niche players, media groups and traditional
directory companies.
Industry colleagues are European search companies originating
in directory operations. All of these companies are undergoing
a shift from offline to online and currently have a relatively high
debt due to a combination of growth through acquisitions and
aggressive strategies for the company’s capital structure.
INDUSTRY COLLEAGUES
Unlisted companies
Main Markets
Owners
Revenues 2010
Net debt 2010
EDSA1)
Netherlands, Finland,
Denmark, Austria, Sweden,
Czech Republic, Slovakia,
Poland and Gibraltar
-
-
-
Truvo2)
Belgium, Ireland, Romania
and Portugal
Apax Partners Worldwide
LLP and Cinven Ltd
-
-
Eniro
Sweden, Norway, Denmark,
Finland and Poland
Listed in Stockholm
SEK 5,326 M
SEK 3,951 M
Pages Jaunes
France, Spain, Luxemburg
and Morocco
Listed in Paris
EUR 1,125 M
EUR 1,858 M
SEAT
Italy, Germany and Great
Britain
Listed in Milan
EUR 1,111 M
EUR 2,731 M
Yell3)
Great Britain, USA, Spain,
Argentina, Peru and Chile
Listed in London
GBP 1,951 M
GBP 2,830 M
Google
World wide
Listed in New York
USD 29,321 M
n/a
Listed companies
1) EDSA was reconstructed during 2010 and does not publicly report owners, revenues and net debt.
2) Truvo does not publicly report revenues and net debt. The company is under reconstruction at the release of Eniro’s annual report.
3) Yell has not published its year-end result for 2010 at the release of Eniro’s annual report. Instead revenues for the last twelve months are stated.
Sources: BIA/Kelsey is an independent adviser and analyst company, specialized in local media.
IRM is an independent organization that analyze the advertisement and media market in Sweden.
Mediavision is an independent adviser and analyst company, specialized in consumer behavior in digital media.
13
CORPORATE RESPONSIBILITY
Eniro’s ambition is to take social responsibility and
be proactive in relation to all stakeholders – customers, users, employees, shareholders and suppliers.
This means taking responsibility not only ethically
and socially, but also environmentally.
Eniro’s services provide important community information,
which is useful for customers and users. All Eniro’s search
services and directories contain information on various social
services in the municipality and county council. Search services make it easy to find, for example, information about products, events, addresses and opening hours, which simplifies
life for users. Through its local distribution, Eniro’s products
and services are also important marketing channels for small
and medium-sized businesses.
Customers are at the core of Eniro’s business. To be perceived
as both respected and serious is paramount, while at the same
time, it is crucial to demonstrate the value of Eniro’s services.
In order to demonstrate the transaction value generated by
Eniro’s services, studies are regularly carried out to show the
value of investing in Eniro products. To improve customer relations, the previously separate sales forces for print and online
were combined into a single sales force that sells packages for
all distribution channels in the beginning of 2010.
Users are one of Eniro’s main target groups. The requirement
to develop relevant new products and be at the forefront of
innovation and functionality is constantly increasing. As part
of responsible behavior, Eniro does not allow advertisements
that are discriminatory or offensive in terms of ethnicity, gender, religion or political beliefs, sexual orientation, nationality
or similar. There are also restrictions on the advertising of alcohol, in accordance with the law, and advertising of tobacco
or drugs is not allowed. For Internet services, Eniro also provides a “family filter” which can be activated by the user.
Sustainability
Eniro promotes a systematic and targeted environmental initiative and Eniro in Sweden and Norway are certified according
to the ISO 14001 standard. In 2010, work focused primarily on
environmental production and distribution of directories, transportation and waste reduction. The environmental impact of directories in Sweden, Denmark and Norway have been mapped
along the entire value chain in order to place the directory’s environment impact in a broader context. In order to identify the
environmental impact of Internet services, a life cycle analysis
of Eniro’s online services has been performed.
All company cars Eniro buys are environmentally friendly. This
has resulted in reduced fuel consumption and reduced costs for
the company. As far as travel is concerned, the target is to reduce the environmental impact of travel. Traveling is increasingly
being replaced with videoconferencing and teleconferencing,
which will save employees both time and travel expenses.
Eniro strives to adapt the directory circulation according to
demand. Therefore, White Pages have been distributed in
Stockholm, Gothenburg and Malmö only upon request. Citizens of Sweden and Norway can choose not to receive Eniro’s
directory. A further measure to customize directory circulation
is the elimination of customers’ advance copy of the Yellow Pages in Sweden. Taken together, these measures have led to reduced carbon emissions, environmental benefits and savings.
Please see Eniro’s website for more information on Eniro’s
environmental work.
It is important for the company to be an attractive employer.
Eniro must be a workplace that employees can feel proud of,
not only in its capacity as a driven sales and development
organization, but also in its capacity as a responsible company
that cares about environmental and social issues.
In 2010, Eniro took part in “The Carbon Disclosure Project,”
an annual survey that charts listed companies’ greenhouse
gas emissions and strategies relating to climate change. Eniro
also forms part of Robur Ethica funds, which includes companies that credibly show that they can manage their social,
ethical and environmental risks.
Eniro works with carefully selected suppliers to ensure high
quality. A purchasing policy requires suppliers to have an environmentally friendly approach.
14
ORGANIZATION
Following a major reorganization in the fall of 2009, the first
step was taken in altering the company structure from a holding company structure to an integrated group, a change that
in everyday speech would be termed “One Eniro”. In 2010, this
process of change continued with greater intensity.
and mobile services and sales teams created to focus on winning back customers who had left Eniro. By make better use
of under-used channels such as customer service, letters and
SMS, Eniro will make sales more efficient.
In early September 2010 the company announced the appointment of the new CEO, Johan Lindgren. Under his direction further steps were taken to streamline the company and
reduce its cost base by aligning the organizational structure
and increasing synergies primarily in product development,
sales concept development and Service Delivery, a Nordic coordination of the former divisions IT and Operations.
Equality
Meanwhile, customer and market focus was reinforced by the
creation of country-based sales organizations with revenue
responsibility clearly defined for each geographical market.
Work relating to improving efficiency resulted in employees
leaving the Group during the year while a number of external
specialists, primarily in product development were recruited
to strengthen the company’s competitiveness. Even staff
functions have been streamlined by reducing the number of
employees and clarifying roles and responsibilities. Efficiency
work and the divestment of operations in Finland resulted in
the reduction of 1,065 employees during the year (of which
392 are related to the divestment of the Finnish operations).
The total number of employees reached 3,929 at the end of
the year.
Increased sales focus
During the year, Eniro Sweden was named as “Best innovator” by the business magazine Veckans Affärer for its revised
Equality Plan. The company has a very even distribution of the
number of employed men and women with 56 percent women. Of the more than 250 managers in the company, 43 percent are women. During the year, Eniro has conducted training and seminars for managers using the theme of “parental
smart business” and the company has also invested in activities for employees on parental leave in order to strengthen its
position as an equal opportunities company.
NUMBER OF EMPLOYEES
2010
Dec 31
2009
Dec 31
Sweden
Norway
Denmark
Finland
Poland
1,334
799
377
381
1,038
1,625
914
433
783
1,239
Total
3,929
4,994
The sales force organization is the backbone of any salesoriented company and a key success factor for Eniro. The sales
force of over 2,000 people primarily forming Eniro’s staff and
the sales organization is tailored to the conditions in each
market, although there is a common structure that applies to
all market units.
The company increased its focus on sales during the year by
implementing a number of strategic initiatives. In the beginning of the year, the previously separate sales forces for
offline and online were combined to meet customers’ desires for only one contact at Eniro. A new support unit, Sales
Development, was created to focus exclusively on sales concept development and sales training as part of the Eniro
Business School. All sales managers conducted an evaluation
to ensure that every leader possessed the right skills and the
right values for the company. As a basis for the assessments,
the company produced a management profile, which outlines
the company’s requirements and expectations of its leaders.
As part of its plan to reverse the negative development of revenues, specific sales teams were created for media products
15
CORPORATE GOVERNANCE 2010
This report has been reviewed by Eniro’s external auditors. The corporate governance report is
not part of Eniro’s formal annual report. Eniro has
applied the Swedish Code of Corporate Governance since 2005. The code is available on the Swedish Corporate Governance Board’s website www.
corporategovernance.se. Eniro has no instances
of non-compliance to report for the financial year
2010.
PROPOSAL1
BOARD 2
COMPENSATION
COMMITEE,
AUDIT COMMITEE,
COMMITTEE FOR
ONLINE STRATEGY
INFORMATION
AUDITOR
Responsible for the
control of the entire
business. Reports to
the Board and to
the shareholders.
REPORTS &
CONTROL
INFORMATION
GOALS,
STRATEGIES &
CONTROL
INTERNAL AUDIT
Reports to the Audit
Commitee.
ELECTION
EL
EC
TI
ON
ELECTIONS
ANNUAL
GENERAL
MEETING
1
INFORMATION
NOMINATION
COMMITEE
PRESIDENT
AND CEO
& GROUP
MANAGEMENT
INTERNAL
GOVERNANCE
INTERNAL
GOVERNING
INSTRUMENTS INSTRUMENTS
EXTERNAL GOVERNING INSTRUMENTS
Business
concept
and goal,
associa-of association,
Swedish Companies
Swedish of
Annual
Business
concept
andarticles
goal,ofarticles
rules ofAct,
procedure
the
tion, rules of procedure of the Board, instrucReports Act, Rule Book for Issuers Nasdaq OMX
Board, work instructions for the President
and CEO, strategies and policies,
tion for the President and CEO, strategies and
Stockholm, other relevant laws and Swedish
such assuch
Eniro
Internal
and processes
policies
as Eniro
Code Corporate
of CorporateGovernance,
Code of Corporate
Governance. for internal
control and
Governance,
andmanagement.
processes for internal control
and management.
EXTERNAL GOVERNANCE INSTRUMENTS
Swedish Companies Act, Swedish Annual Reports Act, other relevant laws,
Nasdaq OMX Stockholm’s Rule Book for Issuers, and the Swedish Code of
Corporate Governance.
1. The Nomination Committee prepares proposals for resolutions which are presented at
the AGM. The AGM appoints the members of the Nomination Committee or determines
the manner in which they are to be appointed.
ENIRO’S CORPORATE
GOVERNANCE STRUCTURE
General meetings
The shareholders’ influence over the company is exercised at
the shareholders’ meeting, which is the company’s supreme
decision-making body. To accommodate foreign shareholders
attending general meetings, Eniro provides simultaneous English interpretation of the general meetings to shareholders requesting this service when giving notice of intention to participate at the Annual General Meeting (AGM). Eniro also provides
English translations of all documents on Eniro’s website. These
documents
will also
beproposals
sentforto
any which
shareholders
1. The Nomination Committee
prepares
resolutions,
are presented at requesting
the AGM. The AGM specifies how the members of the Nomination Committee are to be
them.
appointed for the following year.
2. The Board decides which committees to establish and elects current Board members to
the membership of each committee.
On
the basis of the resolution passed at the AGM in 2007, the
Board may, at the company’s expense, collect proxies from the
shareholders
in accordance with the procedure described in
Eniro is a Swedish public limited liability company. The shareholders of Eniro
are those who
ultimately decides
about the group’s
governance
throughCompanies
their
Chapter
7 Section
4 Paragraph
2 of the
Swedish
Act.
election at the General Meeting of the Company’s Board, which in its turn is
then the body that has the day-to-day responsibility for ensuring that the
governance complies with laws and other external and internal governing
instruments.
Nomination
Commitee
All shares have the same voting rights. The model describes the structure of
corporate governance within Eniro.
The task of the Nomination Committee is to present proposals
for election of the Chairman of the AGM, election of the Chairman
and Members of the Board, remuneration of the Board Members,
the process for election of the Nomination Committee, and if
applicable, a proposal for the appointment of and remuneration
to the auditors.
The AGM resolves on the method for appointing the members
of the Nomination Committee for the subsequent year and the
method for appointing the current Nomination Committee is described in the minutes of the latest AGM which may be downloaded from www.eniro.com.
Since 2005 the AGM has determined that the four largest shareholders and the Chairman of the Board shall form the Nomination
Committee. The name of the members of the Nomination Committee are announced in a press release as soon as they have
been appointed. Such announcement takes place no later than
six months prior to the AGM.
Eniro is a Swedish public limited liability company. The shareholders of Eniro ultimately
decide upon the Group’s corporate governance through the election of the Board of
Directors at the General Meeing. The Board, in turn, is the body having the day-to-day
responsibility for ensuring that the corporate governance functions comply with laws
and other external and internal governance instruments. All shareholders may vote for
the full number of shares held and represented at the General Meeting, without any
restriction on voting rights. All shares entitle equal voting rights. The model illustrates
the structure of corporate governance within Eniro.
If a member of the Nomination Committee resigns from the position prior to the conclusion of the Committee’s work, the same
shareholder who appointed the resigning member shall, if considered to be necessary, appoint a successor, or if that shareholder
no longer, in terms of voting rights, is one of the four largest shareholders, then such appointment can be made by the new shareholder in that group. The Nomination Committee’s proposals
are presented in the notice of the AGM and on Eniro’s website.
When the notice of the AGM is published, the Nomination Com-
16
2. The Board determines the committees to be established and appoints current Board
members to serve as the members of each of the committees.
mittee also publishes a reasoned statement regarding the motivation behind its proposed Board composition on Eniro’s website,
www.eniro.com.
Board of Directors
The Board of Directors is to manage the company’s affairs in the
interests of the company and all shareholders. According to the
Swedish Companies Act, the Board has overall liability for the organization of the company and the management of the affairs
of the company. According to Eniro’s articles of association the
Board shall be comprised of four to ten members, who are nominated by the Nomination Committee and elected annually by the
AGM for a term until the end of the next AGM.
The rules of procedure of the Board are adopted at the Board’s
annual constituent meeting held directly after the AGM and provide an important part of the framework for the Board’s duties.
The rules of procedure of the Board provide, inter alia, that the
Board shall hold six meetings every year, including the constituent meeting.
The Board has presently appointed three Board committees, the
Compensation Committee, which was appointed for the first time
in 2001, the Audit Committee, which was appointed for the first
time in 2004 and a Committee for Online Strategy which was
appointed for the first time at the Board meeting held on July
14th 2010.
Auditors
Annual general meeting
Eniro’s AGM 2010 was held on May 4th at Berns Salonger in
Stockholm. All Board members elected at the AGM 2010, except
for Thomas Axén, were present at the AGM. Some of the most
important matters addressed at the AGM included the following:
Election of the Board
In accordance with the Nomination Committee’s proposal, it was
resolved to continue with the Board’s composition of seven Board
members with no deputy Board members. Luca Majocchi had announced that he was not available for re-election and Thomas
Axén was elected as a new Board member. The remaining present Board members were re-elected as members of the Board.
Lars Berg was re-elected as Chairman of the Board.
Remuneration principles
The AGM 2010 approved the Board’s proposed remuneration
principles for senior management and resolved in favour of the
Board proposal on further development of the existing scheme
for synthetic shares. The full version of the principles can be
found in an attachment to the notice of the AGM 2010, “The
Board’s complete proposals”. Visit www.eniro.com to download
a copy of this attachment.
EXTRA ORDINARY GENERAL MEETING
HELD ON NOVEMBER 26th 2010
Rights issue and reduction of share capital
The AGM elects the company’s auditors. As from June 1st 2011,
auditors serve a statutory term of one year. However, the articles of association may provide for a four-years term, as is
provided for in Eniro’s articles of association. Eniro’s current
auditors were elected by the AGM in 2004 and were re-elected
by the AGM in 2008. The Nomination Committee nominates
the auditors to an AGM which formally elects the auditors.
The auditors regularly meet with the Audit Committee to provide information about the day-to-day audit activities. The
Audit Committee establishes guidelines regarding the kind
of services other than audit services, which may be provided
by Eniro’s auditors. The auditors are present at the AGM and
report their audit of the annual report and the administration.
In addition to the annual report, the auditors review Eniro’s
interim report for January–September.
The Extra Ordinary General Meeting (EGM) of Eniro held on
November 26th 2010, approved the Board’s resolution of
October 27th 2010 regarding a rights issue of approximately SEK 2.5 billion and thereto connected resolutions on
amendments to the articles of association and reduction of
the company’s share capital by SEK 242,372,758.50 without
redemption of shares, resulting in a reduction of the shares’
quotient value from SEK 2 to SEK 0.50. The terms and conditions of the rights issue entitle that each share entitles to
one subscription right and each subscription right entitles
its holder to subscription of 30 new shares at a subscription
price of SEK 0.52 per new share.
As of December 31st 2010, Eniro had 17,472 shareholders. Eniro is
not aware of any shareholder with a direct or indirect shareholding in the company representing one tenth or more of the total
number of shares in the company. Please see page 28 of the annual report for further information on Eniro’s shareholders.
According to the final calculations, a total of 3,830,564,310 shares, representing approximately 79 percent of the offered shares, were subscribed to via the subscription rights. Furthermore,
82,496,095 shares, representing approximately 1.7 percent of
the offered shares, were subscribed to by individuals who had
applied for subscription of shares without holding subscription
rights. A total of 934,394,765 shares, representing approximately 19 percent of the offered shares, were allocated to the
sub-underwriters through re-allocation from the consortium of
banks that had agreed to underwrite the rights issue. In total,
this meant that the rights issue of approximately SEK 2.5 billion
(before issue-related costs) was fully subscribed. Through the
rights issue the number of outstanding shares was increased
by 4,847,455,170 to 5,009,037,009 and Eniro’s share capital was
increased by SEK 2,423,727,585 to SEK 2,504,518,504.50.
17
CORPORATE GOVERNANCE 2010
Shareholders
Reverse split of shares
The work of the Nomination Committee
The EGM also resolved on a reverse split of shares, whereby 50
shares were consolidated into one share. The EGM authorised
the Board to determine the record date for the reverse split, however this is to be no later than February 1st 2011. On January
18th 2011, the Board decided that the record date should be
January 27th 2011. Following the reverse split, the number of
shares amounts to 100,180,740.
The Nomination Committee has, as of January 31st 2011, had
10 meetings.
Amendments to the articles of association –
simplified rules for convening general meetings
Finally, the EGM resolved to amend the articles of association in
simplifying the rules for convening general meetings, following
an amendment to the Swedish Companies Act.
ATTENDANCE GENERAL MEETINGS 2010
At the Annual General Meeting 2010
The total number of represented shares and votes at the Meeting
was 60,176,467, corresponding to approximately 37 percent of the
total number of shares entitling the right to vote at the Meeting.
At the Extraordinary General Meeting 2010
The total number of represented shares and votes at the Meeting was 33,711,351, corresponding to approximately 21 percent
of the total number of shares entitling the right to vote at the
Meeting.
NOMINATION COMMITTEE
APPOINTED BY THE AGM 2010
The AGM 2010 resolved that the Nomination Committee for the
AGM 2011 shall be appointed according to the same principles
as have been applied since the AGM 2005. These principles are
described in their entirety in the minutes of the AGM, which are
available on www.eniro.com.
The members of the Nomination Committee who will serve until the AGM 2011 were announced in a press release on September 20th 2010. Pursuant to changes in the ownership structure,
changes in the composition of the Nomination Committee were
announced in press releases on November 26th 2010 and January 20th 2011.
The annual evaluation of the Board’s work and the individual
evaluation of each Board member constitute an important part
of the Nomination Committee’s work. Since 2005, this evaluation has consisted of an in-depth evaluation every second year
(odd numbered years), with a follow-up of and evaluation based on the in-depth evaluation during the subsequent year.
The in-depth evaluation has previously been carried out with
the assistance of Active Owner Partners, an independent external consultant, through extensive questionnaires and individual
interviews. The results have been compiled and presented to
both the Nomination Committee and the Board. In 2009 Active
Owner Partners conducted an in-depth evaluation of the Board.
A summary of the results and recommendations of this evaluation was presented to the Nomination Committee in 2010.
During its 2010 evaluation, the Nomination Committee has also
interviewed and met with all Board members elected by the
General Meeting. This work provided the foundation for the
Nomination Committee’s discussions regarding an appropriate
composition of Eniro’s Board of Directors.
The principle objective of the Nomination Committee is to ensure that, given the nature of Eniro’s business, the Board has
an appropriate composition as regards competence, knowledge
and experience. The Nomination Committee has also recived
candidate nominations from shareholders not represented in
the Committee as well as from private individuals.
THE BOARD OF DIRECTORS
Distribution of work
Every year the Board adopts written rules of procedure of the
Board which, together with the Swedish Companies Act, the Articles of Association and the Swedish Code of Corporate Governance specify the Board’s responsibilities and distribute those
responsibilities within the Board, i.e. between the Chairman and
the remaining Board members, as well as between the Board
and its committees.
The rules of procedure of the Board contain guidelines for the
day-to-day Board work. The Board shall normally hold six ordinary meetings per year, one of which shall be held with the
company’s auditors in attendance. Extra Board meetings may
MEMBERS OF THE NOMINATION COMMITTEE
Name
Appointed by
Maria Wikström
Länsförsäkringar Fondförvaltning AB Erik Sjöström
Skandia Liv
Peter Rudman
Nordeas fonder
Hans Ek
SEB fonder
Lars Berg
Position
Financial analyst
Fund manager
Director of Corporate Governance
CEO
Chairman of Board of Eniro AB *) According to Euroclear Sweden AB as of February 28th 2011.
Peter Rudman is the Chairman of the Nomination Committee.
18
Shareholding in Eniro*), %
5,7
5,6
2,8
3,5
be held in order to deal with matters that cannot suitably be
dealt with at an ordinary meeting. Such meetings may be held
by telephone, by video conference or by circulation. Ordinary
meetings shall normally be convened by notice to the members
one week in advance. The notice shall enclose the agenda and
relevant documents and background materials regarding the
items that are to be resolved upon at the meeting.
The Board shall meet with the company’s auditors at least
once per year without the presence of senior management.
The group’s auditors participate at the Board meeting where
the year-end and the interim report for the third quarter are
approved. The auditors’ review and audit reports will have been
presented to the Audit Committee beforehand.
The Chairman is ultimately responsible for the Board’s work
and oversees the operation of the business in close consultation with the President and CEO. The Chairman is responsible
for making sure that the other Board members receive the
information they require to execute their assignments in a
responsible manner. The Chairman is also responsible for ensuring that the annual evaluation of the Board’s work is carried
out. The Chairman is to represent Eniro in ownership matters.
The rules of procedure of the Board include instructions on the
distribution of duties between the Board and the President and
CEO and procedures for the manner in which the President and
CEO shall keep the Board informed of the development of the
business and the financial position of the group. The President
and CEO participates in all Board meetings except those dealing with the evaluation of the President and CEO’s work. Other
members of senior management participate, when necessary,
in order to keep the Board informed, or on request by the Board
or the President and CEO.
The Board shall be assisted by a secretary who is not a member
of the Board. The group’s Chief Legal Officer is the permanent
secretary of the Board since 2000.
The Board’s work in 2010
The combination of a high level of indebtedness and declining
sales resulted in limited operational and financial flexibility for
Eniro in early 2010 and it was necessary to initiate a discussion with the lenders in the beginnig of June 2010. During the
major part of the year, the emphasis of the Board’s work has,
accordingly, been on creating financial flexibility to implement
the previously developed strategy, and the following action plan
was drafted:
• Reduced indebtedness
• Increased focus on profitable operations
• Continued cost reductions and commercial focus
Increased financial flexibility was achieved through a new rights
issue during the last quarter of 2010, which strengthened the
balance sheet. A new credit facility agreement was negotiated
in conjunction with the rights issue. In September 2010, the
Board appointed a new President and CEO, Johan Lindgren.
Eniro’s Board held 21 meetings in 2010, of which five were held
by circulation and eight by telephone.
COMPENSATION COMMITTEE
Composition
According to the rules of procedure of the Board, the Board
shall appoint two of its members to comprise the Compensation Committee. Pursuant to the Swedish Code of Corporate
Governance, the Chairman of the Board shall be chairman of
the Compensation Committee and the other members of the
Compensation Committee shall be independent in relation to
the company and the senior management. Necessary knowledge and experience regarding questions on compensation to
senior management are a requirement to serve as members of
the Committee.
The constituent Board meeting on May 4th 2010 appointed the
Chairman of the Board, Lars Berg, and Harald Strømme as members of the Compensation Committee. The Board’s opinion is that
the members of the Compensation Committee meet the requirements stated in the Swedish Code of Corporate Governance
regarding the composition of the Compensation Committee.
Duties
According to the Swedish Code of Corporate Governance, the
Compensation Committee shall, inter alia, prepare the Board’s
proposal to the AGM on the principles on salary and other
remuneration for the President and CEO and other members
of the senior management. According to the rules of procedure
of the Board, the Compensation Committee’s proposals shall
be presented to the Board which shall decide to submit the
proposal to the AGM. The proposal shall be in line with market
practice for listed companies.
Right of decision-making
The Board has, through the rules of procedure of the Board,
authorised the Compensation Committee to determine on individual salaries, remuneration and pension benefits for members
of the senior management, excluding the President and CEO.
The work during the year
The Compensation Committee held five meetings in total
during the year and all members participated at all meetings. In
addition to its work with its tasks delegated by the Board, the
Committee’s work has been focused on the following areas.
Due to the reorganization and centralization of the group, a
cross-border harmonization and revision of the terms of remuneration for the senior management was required and this was
achieved through group-wide policies and guidelines on remuneration issues, such as principles for setting wages and policy
for variable salaries, as well as periods of notice and severance
payment. The Committee has also decided on a new model and
structure for remuneration to the company’s sales force, which
has been designed to be more offensive and better adapted to
the company’s competitive situation.
19
Evaluation of program for variable salary and principles for the remuneration for senior management
The share savings program that was resolved at the AGM 2005
will be settled during 2011. The level of participation has been
relatively limited and only a small number of employees have
remained in the program during 2010.
The long term program for synthetic shares that was resolved
by the AGM 2010 and that is intended for senior management
and key employees in the company has been well received.
More than 95 percent of the more than 50 persons that were
offered to participate have accepted. The assessment of the
Committee is that the company is complying with the principles
for remuneration for the senior management resolved by the
AGM in a very satisfactory manner.
AUDIT COMMITTEE
Composition
According to the rules of procedure of the Board, the Board shall
appoint three of its members to comprise the Audit Committee.
Pursuant to the Swedish Companies Act and the Swedish Code
of Corporate Governance, the members of the Audit Committee may not be employed by the company, the majority of the
members of the Committee shall be independent in relation to
the company and the senior management, at least one of the
members who is independent in relation to the company and the
senior management shall also be independent in relation to the
company’s major shareholders, and at least one of the independent members shall have accounting or audit competence.
The constituent Board meeting on May 4th 2010 appointed Barbara Donoghue as Chairman and Lars Berg and Karin Forseke as
members of the Audit Committee. The Board’s opinion is that the
members of the Audit Committee meet the requirements stated
in the Swedish Companies Act and the Swedish Code of Corporate
Governance regarding the composition of the Audit Committee.
The Audit Committee shall be assisted by a secretary, who
should also be the secretary of the Board, i.e. the Chief Legal
Officer of the Group.
Duties
According to the Swedish Companies Act, the Audit Committee
shall, inter alia, review the company’s financial reporting. According to the rules of procedure of the Board, the Audit Committee
is responsible for preparing the work that the Board performs
to ensure the quality of the Group’s financial reporting. This
includes overseeing both the auditing processes and the effectiveness of internal controls of financial reporting. The Audit
Committee will meet Eniro’s auditor and keep itself informed of
the scope and focus of the auditor’s work. In that context, it will
also evaluate the auditor’s performance. The Committee shall
also, with the auditor, discuss their view on the risks of Eniro
relating to the financial reporting.
The Audit Committee shall share the results of its evaluation of the
auditor’s performance with the Nomination Committee, and shall
assist the later in preparing proposals both for the appointment of
the auditors and for the level of remuneration for audit work.
20
The internal audit function, which reports directly to the Audit Committee, has been established to provide support for the
Audit Committee. The roles and responsibilities of the internal
audit function are outlined in a separate job description adopted by the Board.
Right of decision-making
The Board has, through the rules of procedure of the Board,
authorised the Audit Committee to establish guidelines as regards the services, other than audit services, which Eniro may
purchase from its auditor, and to annually adopt the internal
audit plan in consultation with the external auditor.
The Audit Committee has the right to request information and
support for its work from any of the Group’s employees. It also
has the right to require that specific employees participate in
meetings of the Audit Committee. The Audit Committee may
independently seek advice from external advisors in such issues
where the Committee considers it necessary.
The work of the Audit Committee was performed according to
the instructions the Board had provided to the Committee.
According to the rules of procedure of the Board, the Audit
Committee shall hold at least three meetings each year. In 2010,
the Audit Committee held seven meetings.
Audit Committee meetings were attended by the President and
CEO, the CFO and, on five occasions, by the external auditors.
The entire Board met twice with the external auditor without
the presence of senior management.
During 2010, the Audit Committee monitored changes to financial reporting which resulted from changes in the management organizational structure of Eniro. This led to an update of
the segment reporting. The Committee undertakes an annual
agenda designed to provide oversight of key accounting and
financial reporting issues, such as goodwill impairment and
provisions. This agenda is informed by the results of the annual risk assessment. In addition to this revolving agenda, the
Committee’s key projects focused on the tax reassessment notice from the Norwegian Tax Authorities, goodwill impairment
tests, restatement of the guidance to the market and negotiations with Eniro’s lending banks regarding the credit facility.
ONLINE STRATEGY COMMITTEE
Composition
At the Board meeting held on July 14th 2010, the Board determined to, for the period until the end of the 2011 General Meeting,
establish the Online Strategy Committee and appoint the Board
members Simon Waldman (Chairman) and Mattias Miksche as
members of the Online Strategy Committee. The main purpose of
the Committee is to develop and monitor Eniro’s high level digital
strategy and the President and CEO, as well as the Senior Vice
President Group Product & Services, participate at its meetings.
The Online Strategy Committee held one constituent meeting
in 2010, and the key point of discussion was the Project Yellow
Revolution regarding product search and the strategy for and
development of core online products and services. The second
meeting of the Committee was held in early January 2011.
ENIRO ORGANIZATION STRUCTURE
CEO
GROUP MANAGEMENT
On September 6th 2010, Eniro’s Board appointed Johan Lindgren
as President and CEO of Eniro AB. Johan Lindgren took his position with immediate effect and the previous CEO Jesper Kärrbrink
resigned.
On November 16th 2010, a new organization and senior management was presented with the aim of increasing the focus on sales, further increase the effectiveness of the product development
and delivery organization as well as to supplement the finance
function. As of November 16th 2010, Eniro’s Group Management
is comprised of President and CEO, Vice President and Senior
Vice President Group Product & Services, Senior Vice President
Group Sales Development, Senior Vice President Service Delivery,
Senior Vice President Group Controlling and Transformation, CEO
of Eniro Sweden, CEO of Eniro Norway, CEO of Eniro Denmark, CEO
of Eniro Poland, Chief Financial Officer, Communications Director
as well as Senior Vice President of Group HR. The CEO manages
the Group Management’s work and undertakes decisions after
consultations with its members.
Remuneration
The company’s principles on remuneration and other terms of
employment for senior management are adopted by the AGM
annually and currently comprise fixed and variable salary, longterm incentive schemes, and benefits, such as pension and insurance. The principles can be found in their entirety in an appendix
to the minutes from the AGM 2010, “The Board’s complete proposal” available on www.eniro.com.
When the AGM adopted the principles described above, the
AGM also authorized the Board to deviate from said principles
if particular circumstances were at hand. The Board of Directors
has decided to deviate from the principles in the cases and for
the particular reasons set forth below.
Due to the limited period of time that the President and CEO Johan Lindgren had been employed by the company during 2010,
the President and CEO’s variable salary is entirely discretionary
and proportionate to the four month period during which the
President and CEO was employed. The current program for conversion of variable salary to synthetic shares was approved by the
AGM in 2006 and was adjusted on the basis of a resolution by
the AGM in 2010. The scheme comprises approximately 50 senior
managers and key employees. Please refer to note 5 of the annual
report for further details on this program, and other remuneration
and terms of employment.
Eniro Denmark
CFO
Group Controlling
&
Transformation
Group Human
Resources
Corporate
Communications
& IR
Group Sales
Development
Group Legal
Eniro Norway
(incl. Voice)
Eniro Sweden and
Finland (incl. voice)
Eniro Poland
Group Product & Services
Group Service Delivery
AUDITORS
The AGM in 2008 appointed PricewaterhouseCoopers AB as
auditor until the AGM in 2012. PricewaterhouseCoopers AB
were represented by Bo Hjalmarsson and Sten Håkansson.
The AGM was notified that Bo Hjalmarsson had been appointed as Auditor in Charge.
Bo Hjalmarsson
Born in: 1960
Authorized Public Accountant since: 1989
Other significant audit assignments: TeliaSonera, Duni, Lundin Petroleum and
Vostok Nafta.
Other significant assignments: Chairman of Far’s Policy Group for auditing.
Sten Håkansson
Born in: 1960
Authorized Public Accountant since: 1988
Other significant audit assignments: Lundin Mining, Coor, Net Insight and
Teracom.
Other significant assignments: –
REMUNERATION FOR THE AUDITORS 2008–2010 (SEK M)
Year
Other assignments
Audit
Total
2008
2009
2010
1,4
0,9
1,4
5,1
9,2
9,1
6,5
10,1
10,5
In 2010, the audit fee included revision of the rights issue prospectus. In 2009, the audit
fee included revision of the rights issue prospectus and the supplementary examination
in conjunction with the issuance of the interim report for the first quarter in 2009.
Information regarding the company’s current share and share
price related incentive program is available on Eniro’s website
www.eniro.com.
21
THE BOARD
Lars Berg
Thomas Axèn
Chairman of the Board since 2003
Significant professional commitments/
employment: President of Axstores AB.
Education: Master’s Degree in Economics
and Business Administration, Stockholm
School of Economics.
Other significant Board assignments:
Åhléns AB, AxStores Sweden AB, Kicks
Kosmetikkedjan AB and Litorina Kapital AB.
Former positions: Various executive positions
within the Bonnier group incl. CEO of
Bonnier Dagstidningar AB, Chairman of
Dagens Nyheter AB, Sydsvenska Dagbladet
AB, Expressen AB och Skånemedia AB,
member of the Board of Directors of
Tidningarnas Telegrambyrå AB, Svenska
Tidningsutgivarföreningen and Tolerans AB.
employment: European Venture Partner,
Constellation Growth Capital, New York.
Education: B.Sc. Econ., Gothenburg School
of Economics.
Other significant Board assignments: Net
Insight AB (publ), Ratos AB (publ), Tele2 AB
(publ) and KPN OnePhone, Düsseldorf.
Former positions: Member of Mannesmann’s
executive management with responsibility
for the Telecom Division, President and CEO
of Telia AB and executive positions within
the Ericsson Group. Member of the Board
of directors of Telefonica Moviles, Madrid,
PartyGaming, Gibraltar, Carnegie Investment
Bank AB (publ) and Schibsted ASA, Oslo.
Lars Berg has informed Eniro’s Nomination
Committee that he is not available for
re-election at the AGM 2011. Lars Berg will
maintain his position until that time.
22
Barbara Donoghue
Karin Forseke
employment: Director of Manzanita Capital
Ltd.
Education: MBA and Bachelor of Commerce,
McGill University.
Other significant Board assignments: Panel
Member of the UK Competition Commission
and Trustee at Refuge.
Former positions: Managing Director of
Nat West Markets and Hawkpoint Partners,
member of the Independent Televison
Commission, teaching fellow at the London
Business School.
employment: –
Education: Economics, Sociology and
Marketing studies at UCLA Extension, Los
Angeles.
Financial Services Authority (FSA) in
England, Walleniusrederierna AB (Wallenius
Lines), Kungliga Operan AB (the Royal
Swedish Opera), European Council on
Foreign Relations, Dansens Hus and deputy
board member of Innovation Development
in Europe AB.
Former positions: CEO of Carnegie
Investment Bank AB, COO for LIFFE (London
International Financial Futures Exchange),
Private Advisor to the Minister of Local
Government and Financial Markets.
Mattias Miksche
Harald Strømme
employment: CEO of Stardoll AB.
Education: Master’s Degree in Economics
and Business Administration, Stockholm
School of Economics.
Stardoll AB, Avanza Bank Holding AB (publ),
Avanza Bank AB, Membrain Network Capital
Aktiebolag, Sportamor AB, Dustin Group AB
and Celebmedia Posh24 AB.
Former positions: Member of the board of
directors and CEO of Lovefilm Sverige AB
and E*Trade Sverige AB and Member of the
Board of directors of Dustin AB, Polar Rose
AB and Spader Knekt Sverige AB.
employment: Managing Director & Editorin-Chief of TV Norge AS, part of the
ProSiebenSat1 group, CEO of SBS Norge AS
and chairman of Vega Förlag AS.
Education: MBA, Handelshøyskolen BI /
Norwegian School of Management and
Bachelor of Science in Journalism, School
of Journalism & Mass Communication,
University of Colorado at Boulder.
Other significant Board assignments: Vega
Forlag AS, SBS Radio Norge AS , SBS Norge
AS and SBS Broadcasting Networks Ltd.
Former positions: Managing Director and
partner of TRY Advertising AS. Various
executive positions within TV2 AS,
Kunnskapsforlaget ANS and Verdens Gang
AS (VG). Chairman of the Board of directors
of Apt AS.
Simon Waldman
Lina Alm
employment: Group Product Director of
Lovefilm.
Education: Classics, University of Bristol.
Other significant Board assignments: –
Former positions: Chairman of the U.K.
Association of Online Publishers. Various
positions within the Guardian Media Group,
including as Head of Digital Strategy and
Development.
Employee representative
Bengt Sandin
Jonas Svensson
employment: Manager of environmental
issues at Eniro AB.
Education: Upper secondary school of
Economics.
Former positions: Salesperson.
employment: Customer service employee
at Eniro 118 118 AB and Customer Service
Citizens Eniro Sverige AB.
Education: Upper secondary school.
Other significant Board assignments: Board
member/treasurer of the Unionenklubben
Eniro and alternate (for the employee
representatives) of the Board of Eniro 188
188 AB’s Pension Fund.
Former positions: Project manager and
business and sales controller at Eniro 118
118 AB.
employment: Chairman of the union at Eniro
AB, “Unionen”.
Education: Business and administration
program, Stagneliusskolan, Kalmar.
Vocational Education in Entrepreneurship
Former positions: Salesperson.
MEMBERS OF THE BOARD OF DIRECTORS
PRESENCE AT MEETINGS
No. of shares Name
Independent Born Elected Nationality in Eniro*)
Board of
Directors
Lars Berg, ordf.
Thomas Axén
Barbara Donoghue
Karin Forseke
Mattias Miksche
Harald Strømme
Simon Waldman
Lina Alm
Bengt Sandin
Jonas Svensson
Ola Leander
Totalt
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Employee rep.
Employee rep.
Employee rep.
Employee rep.
1947
1960
1951
1955
1968
1962
1966
1981
1952
1966
1967
2000
2010
2003
2008
2008
2007
2008
2008
2001
2010
2006
Swedish
Swedish
Canadian/British
Swedish/US
Swedish
Norwegian
British
Swedish
Swedish
Swedish
Swedish
37 000
2 849
80
80
304
70
198
-
21 of 21
14 of 15
21 of 21
20 of 21
19 of 21
18 of 21
20 of 21
21 of 21
21 of 21
15 of 15
2 of 6
REMUNERATION
Compensation Audit Committee Committee
5 of 5
n/a
n/a
n/a
n/a
5 of 5
n/a
n/a
n/a
n/a
n/a
7 of 7
n/a
7 of 7
7 of 7
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Online Strategy
Committee
n/a
n/a
n/a
n/a
1 of 1
n/a
1 of 1
n/a
n/a
n/a
n/a
40 581 Board work
Committee
work
1 000 000
420 000
420 000
420 000
420 000
420 000
420 000
24 000
24 000
21 000
4 500
150 000
n/a
150 000
75 000
n/a
75 000
n/a
n/a
n/a
n/a
n/a
3 634 000 450 000
*) Own or associated natural or legal entities’ holdings of shares and other financial instruments in the company according to information available to the company.
All members of the Board are independent in relation to the company and its senior management as well as independent in relation to the company’s major shareholders.
23
GROUP MANAGEMENT
Johan Lindgren
Morten Algöy
President and CEO
CEO, Eniro Norway
Eniro since: 2010
Born: 1957
Nationality: Swedish
Education/degree: B. Sc. Business
Administration, Stockholm University.
Former positions: Chief Financial Officer
for Telenor’s operation in India, CEO of
Telenor Sweden, Chief Financial Officer for
Bredbandsbolaget, Chief Financial Officer for
MTG and Metro International.
Shares: 105 900*) **)
Eniro since: 1993
Born: 1972
Nationality: Norwegian
Education/degree: Primary education.
Former position: Sales director, Eniro Norway.
Shares: 30*)
Roger Asplund
Annica Elmehagen
CEO, Eniro Poland
Senior Vice President, Corporate
Communications
Eniro since: 1986
Born: 1961
Education/degree: Market Economics, IHM
Business School.
Former position: Sales director, Eniro Sverige
Försäljning AB.
Shares: 112*)
24
Eniro since: 2011
Born: 1969
Education/degree: BA in Communications,
Uppsala University.
Former position: Vice President
Communications, Telenor Sweden.
Shares: –
Peter Hagström
Mathias Hedlund
Senior Vice President,
Group Sales Development
Senior Vice President, Group
Products & Services
Eniro since: 2010
Born: 1957
Education/degrees: IFL Management
Training and IHM Executive Program.
Former positions: Vice President and partner,
Swilkenbridge AB and Director of Sales
& Management Development, Bonnier
Newspapers.
Shares: 1 240*)
Eniro since: 2008
Born: 1970
Education/degrees: B. Sc. Business
Former position: Vice President Games and
Lotteries, Svenska Spel.
Shares: –
Stefan Kercza
Mattias Lundqvist
CEO, Eniro Denmark
Chief Financial Officer 1)
Eniro since: 2011
Born: 1964
Nationality: Danish
Education/degree: M. Sc. Business
Administration, AVT Business School.
Former position: CEO for regions Tamil Nadu
and Kerala of Telenor India.
Shares: –
Eniro since: 2005
Born: 1969
Administration, Växjö University.
Former positions: Group Controller, Eniro
AB and Group Financial Director, TDC Song.
Holding AB.
Shares: 16*)
Krister Skålberg
Göran Sällvin
Senior Vice President,
Group Service Delivery
Senior Vice President, Group
Controlling and Transformation 2)
Eniro since: 2010
Born: 1961
Education/degree: M. Sc. Engineering, Royal
Institute of Technology, Stockholm.
Former position: CIO, Telenor Sweden.
Shares: –
Eniro since: 2006
Born: 1974
Former position: CEO Eniro Finland.
Shares: 186*)
Mattias Wedar
CEO, Eniro Sweden 3)
Eniro since: 2005
Born: 1973
Education/degree: M. Sc. Informatics and
Systems Analysis, Lund University.
Former positions: CIO Eniro and CEO Eniro
Denmark.
Shares: 52*)
1) Since March 2011
2) Since November 2010
3) Since February 2011
*) Own or closely related natural or legal persons holdings of shares and other financial instru-
ments in the company, according to the most current information available to the company.
**)The President and CEO does not own any stocks or holdings in companies with which the
company hass significant business relations with.
INDIVIDUALS LEAVING GROUP MANAGEMENT DURING 2010 AND BEGINNING OF 2011
Jesper Kärrbrink, President and CEO
Einar Storsul, Chief Information Officer
Hans Petter Terning, Chief Officer of Operations
Åsa Wallenberg, Head of Investor Relations
Karin O’Connor, Corporate Communications Director
Jan Johansson, Chief Financial Officer Charlotta Wikström, Senior Vice President of Group HR
left Eniro in September 2010
left Group Management in November 2010
left Eniro in December 2010
left Eniro in February 2011
left Eniro in February 2011
25
BOARD OF DIRECTOR’S
DESCRIPTION OF INTERNAL
CONTROL
Pursuant to the Swedish Companies Act, the Board shall ensure
that the company’s organisation is structured in such a manner
that the accounting, management of funds, and the company’s
finances are, in general, monitored in a satisfactory manner.
The Board shall also establish an Audit Committee which is to
monitor the company’s financial reporting and, in respect of
the financial reporting, monitor the efficiency of the company’s
internal control, internal audits and risk management. Pursuant
to the Swedish Code of Corporate Governance, the Board shall
ensure that the company has adequate internal control and formalised routines to ensure that approved principles for financial reporting and internal control are applied. The Board shall
also ensure that the company’s financial reports are produced
in accordance with legislation, applicable accounting standards
and other requirements for listed companies.
Internal control regarding financial reporting is intended to provide reasonable assurance in terms of the reliability of external
financial reporting, including interim reports, press releases and
annual reports. The Board also ensures that the external financial reports are compliant with laws, applicable accounting standards and other requirements for companies listed on Nasdaq
OMX Stockholm. Eniro has implemented a modified COSO framework for internal control regarding financial reporting and the
framework is divided into five components: control environment,
risk assessment, control activities, information and communication, and monitoring.
FRAMEWORK FOR INTERNAL
CONTROL AT ENIRO
Control Environment
The Board of Directors has established the Audit Committee,
and the Audit Committee is responsible for the preparation
of the Board’s work to ensure the quality of the company’s
financial statements. This also includes monitoring audit processes, ensuring effectiveness of internal controls for financial
reporting, and follow-up on deviation reports.
Responsibility for maintaining an efficient control environment
and effective internal control of financial reporting has been
delegated to the President and CEO. The Group has a function
for internal control supporting the company’s work in developing and improving the Group’s internal processes. During the
financial year 2010, the Internal Audit function was initially resourced internally, but due to limited resources, the Audit Committee decided to transfer the Internal Audit function to an external resource. During 2010, the work proceeded according to the
adopted internal revision plan and the Internal Audit function has
remained in place throughout the transition period. The Internal
Audit function reports directly to the Audit Committee.
The control environment at Eniro is comprised of a number of
corporate policies, guidelines and supporting frameworks related to financial reporting. These include a financial manual
26
with instructions for accounting and reporting, financial policy,
directives and instructions concerning decision thresholds and
authorization levels for different areas, directives concerning
insider issues, and policies regarding information and ethics.
The guidelines are monitored and updated regularly and are
communicated to all employees involved in financial reporting.
Risk Assessment
Eniro implements an annual risk assessment process and, based
on this assessment, the significant risks impacting the internal
control in the financial reporting are identified and evaluated.
This risk assessment provides the foundation for the manner in
which the risks are to be managed through an improved control
environment and also leads to identified prioritised areas which
are evaluated by the internal audit. The risk assessment is the
base for the internal audit plan which is updated throughout
the year on an ongoing basis.
Control Activities
The primary purpose of control activities is to detect and
prevent errors and thereby ensure the quality of financial reporting. Based on the risk analysis, control activities within the
identified processes have been implemented both in the significant subsidiaries and on Group level. These processes are documented with flow charts and detailed descriptions of control
activities ensuring that the fundamental requirements of the
external financial reporting are met. The control activities are
both manual and automated and examples of large-scale control activities include the review and approval of different types
of accounting transactions, analysis of key figures and ratios,
inspection of log lists, reconciling of accounts, and checklists,
as well as application controls for financial information in IT
systems supporting financial reporting.
INFORMATION AND COMMUNICATION
External
Eniro’s communication is to be correct, open and available to all
interested parties simultaneously and without delay. All communication should be provided in accordance with the Nasdaq
OMX Stockholm’s Rule Book for Issuers. The Board has approved an information policy regulating the manner in which the
company is to publish information. Information is communicated regularly to third parties through press releases and via
www.eniro.com.
The Board regularly receives financial reports. The Board reviews
and approves interim reports and the annual report at regular
meetings prior to publication. Financial information about the
company may only be communicated by the President and CEO,
the Chief Financial Officer and the Head of IR.
Internal
Principles and guidelines regarding financial processes are communicated between management and other personnel via regular
meetings, intranet and email. The CFO and of the Internal Audit
function has a standing item on the Audit Committee’s agenda to
report the results of work related to financial reporting. The Audit
Committee regularly reports the result of their work to the Board
in the form of observations, recommendations and suggestions
for decisions and actions to be taken.
MONITORING
The Internal Audit function is responsible for monitoring and
evaluating the operating effectiveness of the company’s internal control system. The Internal Audit function plans the work
in co-operation with the Audit Committee, which approves the
internal audit plan.
The Internal Audit function makes independent assessments
in order to systematically review and suggest improvements to
the effectiveness of the internal controls. During the year, focus
has been on the income accounting and the financial statements process.
Eniro has a system for self-evaluation of the internal control.
Certain of the Group’s subsidiaries report quarterly the operating effectiveness of all key controls. This status report presents
the unit’s development and efforts during the year and provides
an overview of the activities with a significant impact on the
financial reporting of the Group.
The results of the Internal Audit and the self-assessments are
regularly submitted to the Group management and Audit Committee. These ongoing reports form the basis for the Board of
Director’s evaluation and assessment of the effectiveness of
internal controls related to financial reporting and are the basis
for any potential improvement measures.
THE BOARD OF DIRECTORS
Stockholm 17 March 2011
Eniro AB (publ)
Reg. no. 556588-0936
AUDITOR’S REPORT ON THE
CORPORATE GOVERNANCE
STATEMENT
To the annual meeting of the shareholders in Eniro AB
(publ), corporate identity number 556588-0936
It is the board of directors who is responsible for the corporate
governance statement for the year 2010 and that it has been
prepared in accordance with the Annual Accounts Act.
As a basis for our opinion that the corporate governance statement has been prepared and is consistent with the annual ac-
counts and the consolidated accounts, we have read the corporate governance statement and assessed its statutory content
based on our knowledge of the company.
In our opinion, the corporate governance statement has been
prepared and its statutory content is consistent with the annual
accounts and the consolidated accounts.
Stockholm 24 March 2011
Bo Hjalmarsson
Authorised Public Accountant
Partner in charge
Sten Håkansson
Authorised Public Accountant 27
THE SHARE
Share trading
The Eniro share (ENRO) was listed on the NASDAQ OMX Stockholm in 2000. During 2010, total turnover of Eniro shares
amounted to a value of about SEK 12.3 billion (SEK 14 bn).
Average daily trading corresponded to a value of SEK 48.7
M (55.6). The turnover rate, meaning the share’s liquidity,
amounted to 4.6 times (3.4), compared to a rate of 0.87 times
(1.2) for the exchange as a whole.
Share price trend
The market capitalization at the beginning of 2010 amounted to SEK 5.8 billion, and was SEK 2.8 billion at the end of
the year, after the completion of the 2.4 bn rights issue. The
share price declined by 92 percent during 2010, from 354 SEK
in the beginning of the year to SEK 27.50 at 31 December,
2010, adjusted for the rights offering and reversed split. The
highest Eniro share price during 2010 was SEK 369.85, listed
on 4 February. The lowest share price was SEK 26.50, listed
on 21 December. The OMX Stockholmsbörsen All-Share index
(OMXSPI) increased by 21 percent in 2010.
of subscription rights, to around 2 percent by subscription
without preference rights and the remaining 19 percent was
allocated to a number of institutional and private investors
(sub-underwriters). The rights offering was completed in January 2011 and resulted in total proceeds of SEK 2.4 billion
after transaction costs.
Share capital
Through the rights issue the number of shares had increased
by 4,764,959,075 shares to 4,926,540,914 at 31 December
2010. The remaining part of the rights issue, 82,496,095 shares, was registered during January 2011. At 31 December 2010,
Eniro held 218,480 of its own shares. The aim of Eniro´s holding of own shares is to use them for the share savings program which includes employees in the Eniro Group. The average holding of own shares during 2010 was 220,680 shares.
Reversed split
At year-end 2010, the Eniro share was included with a weighting of 0.05 percent in OMXSPI Index (0.17). On the NASDAQ
OMX Stockholm, Eniro belongs to the Nordic Mid Cap segment,
Consumer Discretionary/Advertising.
After the completion of the rights offering, a reversed split of
50:1 was carried out at the end of January 2011 to increase
transparency in the share trading. Through the reversed
split 50 shares were merged into one, and the company’s
total number of shares was reduced from 5,009,037,009 to
100,180,740 shares without changing the total share capital. The quotient value was increased from SEK 0.50 to SEK
25 through the reversed split. Shareholders received a lower
number of shares, but with a higher quota value per share.
Ownership structure
Dividend policy
On 31 December 2010, the number of shareholders in Eniro
was 17,472 (13,732). According to the information known to
the company, the holdings of the 10 largest owners held 38.7
percent (47.8) of the share capital. A total of 24.3 percent
(20.0) was held by Swedish institutions, 30.6 percent (31.3)
was held by Swedish mutual funds and 22.2 percent (12.5) by
private individuals. Foreign owners held 22.9 percent (36.5) of
the share capital.
Eniro’s dividend policy states that up to 50 percent of the
year’s net income can be distributed to the shareholders. For
the financial year of 2009 no dividends were issued after a
decision at the Annual General Meeting on May 4, 2010. For
the financial year 2010, the Board proposes that no dividend
be issued as a consequence of the financial objective to reduce net debt.
Index
Rights offering
An Extra General Meeting (EGM) on November 26, 2010 decided on a fully guaranteed rights offering of SEK 2.5 billion to
secure a long-term sustainable financing, lower the financial
risk and increase operational flexibility. The rights issue involved an increase of the total number of shares by 4,847,455,170
shares, issued at 0.52 SEK. After completion of the rights issue
the total number of shares amounted to 5,009,037,009. The
rights offering was subscribed for to 79 percent by holders
28
SHAREHOLDER CATEGORIES, %
SHARE PRICE DEVELOPMENT 2005 –FEBRUARY 2011
© Nasdaq OMX
2500
2000
1500
1000
22,9%
24,3%
500
22,2%
800 000
600 000
30,6%
400 000
200 000
20
2006
Swedish institutions
2007
2008
2009
2010
2011
Eniro share
Swedish mutual funds
OMX Stockholm_PI
Swedish private persons
Shares, traded, (000’)
Foreign owners
DATA PER SHARE
ANALYSTS FOLLOWING ENIRO
Company
Analysts
SEK
ABG Sundal Collier
Carnegie
Cheuvreux
Citigroup Smith Barney
Deutsche Bank
Erik Penser
Goldman Sachs
Handelsbanken Securities
Nordea
SEB Enskilda
Swedbank
Martin Arnell
Daniel Ek
Niklas Kristoffersson
Thomas Singlehurst
Stefan Lycke
Mikael Holm
Rakesh Patel
Rasmus Engberg
Johan Grabe
Nicklas Fhärm
Christian Anderson
Share price at end of year
Share price, year high
Share price, year low
Net income*)
Cash Earnings*)
Equity**)
Dividend
Average number
of shares at end
of year (000’)*)
Number of shares
at end of year (000’)**) Number of shareholders
at end of year
LARGEST SHAREHOLDERS, 31 DEC 2010
Capital, % Länsförsäkringar fondförvaltning
Skandia Liv
Danske Invest fonder (Sverige)
Fjärde AP-fonden
Sjunde AP-fonden
Zenit Fond
SEB fonder
Nordea fonder
Larsson Bo
Avanza Pension Försäkring AB
Others
Votes, %
7.1
5.6
4.5
3.7
3.7
3.4
3.2
3.0
2.5
2.0
61.3
Total
7.1
5.6
4.5
3.7
3.7
3.4
3.2
3.0
2.5
2.0
61.3
100.0
100.0
2010
2009
2008
2007 2006
27.50 353.08 183.92 996.96 1 519.87
369.85 424.571,005.55 1,591.251,738.20
26.50
80.79 177.05 988.36 1,196.58
-248.43
59.05 -77.03 286.63 229.56
92.65 165.17 326.71 378.44 320.59
35.21 1,893.02 2,723.51 5,023.725,654.24
-
-
-
5.20
4.40
18,597
10,432
4,089
4,553
4,591
98,526
3,227
807
806
906
17,472
13,732
12,424
4,080
5,257
*) Adjusted for the reversed split in July 2009 (4:1) and in January 2011 (50:1) and the bonus element (x 5.07) in the rights offering in December 2010
**) Adjusted for the reversed split in July 2009 (4:1) and in January 2011 (50:1)
DISTRIBUTION OF SHAREHOLDING
No. of shareholders
%
Share capital %
1 – 200
201 – 1,000
1,001 – 10,000
10,001 – 20,000
20,001 – 100,000
100,001 – 200,000
200,001 –
10,443
3,643
2,819
247
203
37
80
59.8
20.9
16.1
1.4
1.2
0.2
0.5
0.1
1.9
8.7
3.5
8.9
5.4
71.2
Total number of shareholders
17,472
100
100
Total number of shares (000’)
98,526
Source: Euroclear and SIS Aktiägarservice, Dec 2010, adjusted for reversed split 50:1
TRANSFER OF CAPITAL TO SHAREHOLDERS
SEK M
2010
2009
2008
2007
2006
Dividends
Redemption of shares
Retention
n/a
n/a
n/a
n/a
n/a
n/a
839
n/a
n/a
797
1,963
n/a
398
n/a
n/a
Total
-
-
839
2,760
398
29
OPERATIVE RISKS AND
RISK MANAGEMENT
Eniro’s definition of risk
RISKS THAT AFFECT THE GROUP’S NET INCOME
Eniro defines risk as the uncertainty that an event could occur
that would affect the company’s ability to achieve its established business objectives within a given period. Risks are
a natural part of all business operations that the organization must be able to manage effectively. Risk management
is designed to prevent risks from materializing or to limit or
prevent risks from adversely impacting operations.
Industry and market-related risks
Eniro has an annual, recurring risk analysis process, Enterprise
Risk Management (ERM), which includes all parts of the business, as well as business areas and group functions. Eniro’s
goal is to identify, assess and manage the risks its faces including industry- and market related risks, commercial risks,
operative risks, financial risks, compliance risks relating to
laws and regulations, and financial reporting risks. The risk
exposure is to a great extent similar within the various business areas, and the risk analysis identifies the different risks
in a structured manner by analyzing a number of risk drivers
per risk category. For each evaluated risk, an assessment is
made to determine to what extent the risk should be monitored, eliminated, reduced or increased. The risk analysis also
provides input for annual business planning, where risk management activities are planned as a part of the strategic and
operational initiatives adopted.
The company’s risk analysis, including risk management activities, are reported to the company’s Audit Committee and the
Board of Directors for evaluation and approval.
Eniro has defined the following three primary purposes of its
risk management processes:
1.
To ensure that the company’s management and Board of
Directors are well aware of the company’s risks and to
ensure that information about the company’s risk exposure is communicated effectively.
2.
To support operative management by providing relevant
risk information and decision-making data to obtain
effective risk management and effective operational
control and monitoring to achieve established business
objectives.
3.
To help company management and the Board of Directors to systematically identify, handle and monitor risks
on various organizational levels in order to minimize damage to the business.
30
Identified risks within industry and market-related:
•
•
•
•
Technology development
Macro-economic factors
Customer behavior
Competition
Both the markets for online and printed products are characterized by high competition in Eniro’s core markets. For
printed products, it is mainly in the form of substitute competition, i.e. when a search channel takes users and advertising
investment from a different type of search channel. As Eniro
has a high market share in the Scandinavian and Polish markets Eniro usually competes with one or more independent
competitors as well as with local and international search
engines on the online market. Eniro faces competition from
both new as well as established directory companies that
continually develop and improve the search functions. In addition to traditional directory companies that mitigate their
operations online, competitors in the online market include
local as well as regional media companies expanding their
activities and global search companies. The printed products
published by Eniro compete with other directories and other
printed forms of advertising operations, including traditional
media such as newspapers, radio, television, billboards and
direct marketing.
During 2010, the new product search service was launched.
Sales of new advertising formats developed for the new product search service started in Sweden and Norway in January 2011 and will start in Denmark in the third quarter 2011.
Eniro’s ability to compete successfully for both advertising
customers and end-users depends on factors both within
and outside its control, including end-users demand for its
services, successful development and timely introduction of
new products and services, Eniro’s ability to deliver relevant
services to its advertising customers and end-users, pricing,
industry trends and general economic trends. Further, Eniro’s
competitors may reduce their prices in an effort to increase
their market share or offer their services at a lower cost than
Eniro. The increasing use of the Internet and mobile telephony
by consumers as means to transact commerce will also likely
result in the development of new technologies, products and
services that could compete with those offered by Eniro. Increased competition in the Nordic markets and in Poland, as
a result of price decreases, new product and service introductions or other factors, could have negative ramifications for
Eniro, including a reduction in Eniro’s advertising customer
and end-user base, lower usage rates and increased costs,
ENIRO ANNUAL REPORT / 2010
which, in turn, may have a material effect on Eniro’s business,
financial condition and results of operations.
Operational risks
Commercial risks
•
•
•
Identified risks within commercial risks:
•
•
Products and services
Pricing models
Eniro’s business model to offer advertisers valuable exposure
requires competitive and accessible search channels with motivated users. Changing user behavior and shifting trends in
terms of purchasing media space constitute significant risks,
and therefore, Eniro is focusing on continuously increasing its
understanding of users’ purchases and demonstrating the value of advertising to our advertisers.
Eniro expects to derive a greater portion of its operating revenues from online advertising as directory usage continues to
migrate from printed products to online.
The expansion of Eniro’s online business is subject to a variety
of challenges and risks including the following:
•
•
•
Inhibited growth of Internet use. Eniro’s product and
service development costs and investments in the online business may not generate expected additional operating revenues if the use of the Internet for information
searches and as a medium for advertising does not continue to grow, or grows at a slower rate than currently
anticipated. The growth may be inhibited for a number
of reasons that Eniro cannot control or predict, including
economic and technological developments.
Changing technology and new product development. The
markets in which Eniro operates and intends to expand
into are characterized by rapidly changing technology,
introductions and enhancements of competing products
and services, and fluctuating advertising customer and
end-user demands, including technology preferences.
Eniro may be unable to upgrade, develop and deploy its
new products and systems and attract experts in a timely
and effective manner.
Changes to pricing of online products and services. Revenues from services and products of the online business are distributed over the contract period, which is
normally 12 months. In relation to pricing policies for online products and services, Eniro expects that some pricing will continue to change from subscription-based to
more performance-based. A shift to more performancebased pricing would decrease the visibility and stability
of Eniro’s revenue base.
Any failure by Eniro in the execution of its overall strategy
and the expansion of its online business may have a material effect on its business, financial condition and results of
operations.
Identified risks within operational risks:
Product offerings
Sales efficiency
Alignment with cost base
As part of its strategy Eniro intends to broaden its product
offering and sales channels, as well as increasing its sales
efficiency. The new product search service launched during
2010, enables Eniro to launch a new range of improved products and services in January 2011. Alongside the existing
products, customers will also be offered a selection of new
improved advertising formats for small to mid size customers. In addition, new products, targeting larger customers
and media buyers, will be launched. With continued launches
within the framework of product search in January 2011, the
mobile offering, which is today only available in Norway, will
be rolled out across the markets of Directories Scandinavia.
Eniro also intends to further increase the efficiency of its sales
force and expand into under-used channels such as email and
mail. Sales efficiency is improving with the shift from a single
point of contact, contacting the customers once a year, and
driven by the annual print canvas cycle, towards a multi-touch
approach which gives an opportunity to retain customers and
generate additional sales throughout the year. Any failure by
Eniro in the execution of its above described intentions to
broaden its product offering and sales channels, and increase
its sales efficiency may have a material effect on its business,
financial condition and results of operations.
As part of Eniro’s cost-efficiency program, Eniro seeks to identify areas for potential synergies and increased efficiency. The
program covers implementation of a common IT platform and
infrastructure across the organization, improving efficiency
of the sales organization, centralizing product development,
reducing general overlaps and inefficiencies, and developing
Group-driven procurement of products and services. Any failure by Eniro in the execution of its cost-efficiency program
may have a material effect on Eniro’s business, financial condition and results of operations.
Financial risks
Identified risks within financial risks:
•
•
•
Funding
Foreign currencies
Interest rates
The Group’s common finance policy as established by the
Board of Directors is the foundation for financial operations,
delegation of responsibility and financial risk management.
The focus of Eniro’s risk management is to reduce or eliminate financial risks, with consideration taken for costs, liquidity
and financial position. In addition to the annual risk analysis,
financial risks are continuously assessed and monitored. For a
detailed description of financial risk management, see special
section Financial risk management in Accounting principles.
31
Compliance risks
Eniro´s identified risks within compliance risks are:
•
•
•
Laws
Regulations
Internal policies
Changed laws, regulations and governmental decisions could
result in changed prerequisites for the business and thus affect Eniro. The company has a well-established system for
internal regulations and policies, which clearly regulates and
determines how the operations should be managed in various
respects. The company regularly follows up its compliance
with laws, regulations and internal policies – for example, through the activities of the internal audit, which includes monitoring of compliance risks.
Financial reporting risks
Correct and objective financial reporting and sound internal
controls are essential for the company’s credibility with respect to shareholders and other stakeholders. Eniro devotes
considerable resources to the development of its processes
for risk analysis and risk management in order to maintain
good internal control of its financial reporting, in accordance
with the intentions of the Swedish Code of Corporate Governance. The risk of essential errors in the company’s financial
reporting is analyzed from the point of view of the consolidated income and balance sheet and significant notes in the
company’s annual report. Key accounts are identified and a
risk analysis carried out, in which both quantitative and qualitative risk parameters are assessed. For a detailed description
of the company’s risk analysis and risk management activities
with respect to its financial reporting, refer to the section on
internal control over financial reporting in the Corporate Governance Report.
32
CONTENTS
ENIRO ÅRSREDOVISNING / 2010
34
Board of Directors’ Report
40
Consolidated Income Statement
41
Consolidated Balance Sheet
42
Changes in Group equity
43
Consolidated cash flow statement
44
Parent Company Income Statement
45
Parent Company Balance sheet
46
Changes in equity, Parent company
47
Parent Company cash flow statement
48
Accounting principles
57
Notes
57
Note 1 Information per segment
58
Note 2 Breakdown of operational costs 58
Note 3 Employees
59
Note 4 Salaries and other compensation
59
Note 5 Compensation and other benefits,
Board of Directors, President and
other senior executives
61
Note 6 Auditing fees
61
Note 7 Financial revenue and costs
62
Note 8 Tax
63
Note 9 Tangible assets
64
Note 10 Leasing contracts
64
Note 11 Intangible assets
66
Note 12 Accounts receivable and other receivables
67
Note 13 Prepaid costs and accrued revenues
67
Note 14 Cash and cash equivalents
67
Note 15 Borrowing
68
Note 16 Derivative instruments
69
Note 17 Retirement benefit obligations
71
Note 18 Other provisions
71
Note 19 Accrued costs and prepaid revenues
71
Note 20 Commitments and contingent liabilities
72
Note 21 Shares and participation
73
Note 22 Shares and participation in associated companies
74
Note 23 Shares and participation in joint ventures
75
Note 24 Financial instruments by category
76
Note 25 Acquired operations
76
Note 26 Equity
78
Quarterly Summary
78
Multi-year Summary
80
Certification by the Board of Directors and the President
81
Audit report
82
Annual general meeting 2011
83
Definitions
84
Addresses
13
BOARD OF DIRECTOR’S REPORT
Group company operations and structure
The Eniro group was formed on July 1, 2000, by the combination of several companies with similar operations under
a single parent company. Eniro AB (publ) was listed on the
Stockholm Stock Exchange on October 10, 2000.
Eniro is the leading directory operator in the Nordics, with
operations in Sweden, Norway, Denmark, Finland and Poland
and is listed on the Nasdaq OMX Stockholm. With about 2,000
sales representatives, Eniro is one of the largest sales forces in
the region. Our sales force makes about 2.5 million customer
contacts per year and brings together millions of end users with
about 500,000 customers. Through the search directory and its
distribution channels: online, directory, voice and mobile, Eniro
generated a transaction value of more than SEK 250 billion for
its clients in Sweden and Norway during 2010.
Eniro has a unique database that connects sellers and buyers and
makes it easy to search through the various distribution channels: Online, Directory, Mobile, and Voice. The development of new
and improved products and services is core to the strategy for
reaching the vision – Eniro shall be everyone’s first choice in local
search. The aim is to further strengthen Eniro’s already strong
market position while managing the migration from printed products to online directories. In response to this changed search
behavior, Eniro has developed its databases and service towards
increasing relevance for users and enhanced targeting for its
customers. It is Eniro’s aim to increase profitability by progressively transitioning its value proposition and revenue model from
the provision of valuable information to that of transaction-generating information. The yellow search results on eniro.se have
increased since the launch (measured based on number of pages
viewed) and the response from customers has been positive.
On September 6, 2010, Eniro’s Board appointed Johan Lindgren
Group CEO and President of Eniro AB. A new organization and
Group management were presented in November with the aim
of increasing the focus on sales, further enhancing the efficiency
of product development and the delivery organization and supplementing the finance function.
To resolve long-term financing issues, a rights issue amounting to
approximately SEK 2.5 bn was carried out, in which existing shareholders and external guarantors participated. The issue amount
was used to reduce net debt and Eniro has loan agreements that
secure the company’s financing through the end of 2014.
Acquisitions and divestments
ding in Finland’s largest online community, Suomi24 (S24).
In the third quarter, Eniro divested certain assets within the
offline and online operations of Eniro Finland Oy to Fonecta
Ltd, the databases for Helsinki and Pirkanmaa as well as the
business-to-consumer online services, including the domain
name www.eniro.fi. During the fourth quarter, the businessto-business search service Yritystele was sold to Bisnode and
the local telephone directories, ETD, were shut down. These
measures had a negative effect on the result by SEK 626 M,
predominantly related to goodwill. Eniro is now solely focused on Voice in Finland, an operation with revenues of SEK
291 M in 2010 and comprising directory assistance and call
centers, which handle both customer service and telemarketing services.
Eniro Upphandling Offentlig, Oreo, active in public sector procurement, was divested during the fourth quarter, resulting in
a capital loss of SEK 4 M.
Revenues and result
Operating revenues for 2010 amounted to SEK 5,326 M (6,581),
Organically, revenues declined 14 percent. The revenue decline was
due to the transformation from print to online, where the change
rate has been too low, which has led to weak sales efficiency. The
merger of the sales forces at the beginning of the year resulted in
a loss of pace in Swedish sales, which resulted in a substantial drop
in revenues during the second half of the year.
Operating revenues for Directories Scandinavia amounted to
SEK 3,713 M (4,686), an organic decline of 18 percent. Revenues categorized according to the deferral method, calculated as
the share of total revenues from Directory Database services,
amounted to 58 percent.
Operating revenues in Voice Scandinavia amounted to SEK
677 M (712), an organic decline of 5 percent.
Operating revenues in Finland/Poland amounted to SEK 936
M (1,183), corresponding to an organic decline of 10 percent.
EBITDA declined to SEK 605 M (1,807) due to weak revenues
and negative effects of divestment and restructuring totaling
SEK -661 M.
Adjusted EBITDA, excluding restructuring costs and other
items affecting comparability, amounted to SEK 1,266 M
(1,852), a decline of 32 percent, due to lower revenues despite
the efficiency enhancement measures implemented.
Eniro’s offline and online Finnish operations were divested
or closed down during 2010 since they failed to achieve the
desired market position and did not demonstrate sustained
profitability. During the second quarter, Eniro divested its hol-
Operating result for 2010 amounted to SEK -4,176 M (692),
including impairments of intangible assets of SEK 4,261 M, of
which SEK 3,652 M was due to operations in Norway and SEK
34
500 was due to operations in Polen. This impairment was due
to decreased demand for printed products and increased cost
of capital.
For 2010, net financial items amounted to an expense of SEK
563 M (460) and were positively affected by lower interestbearing liabilities. Net financial items were adversely affected
in the fourth quarter by the one-off effects resulting from
the new financing entered into on November 30, 2010. These
one-off expenses of SEK 293 M included the recognition of
capitalized borrowing expenses of SEK 46 M for earlier financing, a capital loss of SEK 197 M on the closing of currency and
interest-rate swaps and a waiver fee of SEK 50 M.
The result before tax was SEK -4,739 M (232) for 2010.
Net income for 2010 was SEK -4,620 M (608).
OPERATING REVENUES
SEK M
2009
Jan–Dec
Voice Scandinavia
Finland/Poland
3 713
677
936
4 686
712
1 183
TOTAL
5 326
6 581
2010
Jan–Dec
2009
Jan–Dec
Voice Scandinavia
Finland/Poland
Other
941
274
-498
-112
1 486
195
129
-3
TOTAL EBITDA
605
1 807
-80
-581
-147
102
1 266
1 852
EBITDA
Of which items affecting comparability
Restructuring cost
Other items affecting comparability
TOTAL ADJUSTED EBITDA
Operating revenues in Voice Scandinavia amounted to SEK
677 M (712), corresponding to an organic decline of 5 percent.
EBITDA improved to SEK 274 M (195), as a result of the cost savings measures implemented during late 2009 when, among
other actions, a number of directory assistance operational
locations were closed down.
Finland/Poland
Operating revenues amounted to SEK 936 M (1,183), down 21
percent, corresponding to an organic decline of 10 percent.
Operating revenues in Poland declined organically by 13 percent due to weakening demand for printed directories. EBITDA
for the Finland/Poland business area amounted to SEK -498
M (129) and included the negative earnings effect of SEK 626
M from the divestment of operations in Finland.
Development
2010
Jan–Dec
MSEK
Voice Scandinavia
Operating revenues for Directories Scandinavia amounted to
SEK 3,713 M (4,686), an organic decline of 18 percent. Operating
revenues in the Swedish market declined organically by 22 percent including weakening demand for printed directories, introduction of the new sales concept and low sales efficiency. Operating revenues in the Norwegian market declined 13 percent
organically due to the continued decline in printed directories
and weak development for Kvasir. In Denmark, sales declined
organically by 16 percent due to lower demand for printed directories and weak online sales. The Danish operations were
reorganized and had their efficiency increased during the year.
EBITDA for Directories Scandinavia amounted to SEK 941
M (1,486), including a positive one-off effect of net SEK 45
M from capital loss and reduction of debt on a conditional
purchase consideration, related to the divestment of Oreo.
The work with several development projects continues to
enhance customer offerings and to strengthen relevance
for end users. A new version of eniro.se with product search
was launched in Sweden in September 2010 and in January
2011 a new version of gulesider.no was launched in Norway
with the same functionality. Consequently, Eniro took a major
step toward the vision of being best at local search. The new
search services facilitate a broadened customer offering. The
maps has also been improved in 2010 and more user-friendly.
Further, a new platform for sponsored links has been implemented during the year. Following development costs were
capitalized in the balance sheet.
SEK M
Development
2010
2009
2008
157
149
33
Financial position and cash flow
Operating cash flow declined to SEK 151 M (1,153) due to lower
EBITDA, higher tax payments and one-off effects of refinancing
affected the operating cash flow negatively. The Group’s interestbearing net debt amounted to SEK 3,951 M on December 31, 2010,
compared with SEK 6,645 M on January 1, 2010. Interest-bearing
net debt in relation to EBITDA, excluding ohter items affecting
comparability, was 3.3 (3.9 on January 1). During December, a rights
offering was carried through that generated SEK 2,389 M after
transaction costs. During 2010, net debt was amortized by a net
amount of SEK 2,433M.
On December 31, 2010, outstanding debt under the credit facility
amounted to NOK 1,978 M, EUR 80 M, DKK 400 M and SEK 728 M.
Of this facility, NOK 1,350 M and SEK 360 M are hedged at a fixed
interest rate until the maturity date in August 2012, corresponding
to approximately 45 percent of the facility.
At the end of December 2010, Eniro had an unutilized credit facility
of SEK 300 M. Cash and cash equivalents and unutilized credit facilities amounted to about SEK 750 M.
35
limits for the number of shares was changed and had the effect that fifty (50) shares were merged into one (1) share.
INTEREST BEARING NET DEBT
SEK M
2010
Jan–Dec
2009
Jan–Dec
Opening balance
Operating cash flow
Acquisitions and divestments
Share issue
Translation difference and other changes
-6 645
151
26
2 389
128
-9 948
1 153
-50
2 343
-143
Closing balance
Net debt/EBITDA adjusted for other
items affecting comparability, times
-3 951
-6 645
3,3
3,9
On November 30, 2010, Eniro entered into a new credit facility
agreement with the same bank consortium as under previous
credit facilities agreement. The new credit facility was effective per January 13, 2011. For more information regarding the
new credit facility see note 15 Borrowing.
On December 31 2010, the registered share capital amounted
to SEK 2,504,518,505 distributed among 5,009,037,009 shares.
During January 2011 a reversed share split 50:1 was conducted
and amount of shares decreased to 100,180,740. At the end of
the year the quota value per Eniro share was 0.50 SEK and after
the reverse split of 50:1 the quota value per share was 25.0 SEK.
At year-end 2010, Eniro held 218,480 treasury shares. These
shares will be retained for use in the share-saving program.
The average treasury share holding during 2010 was 220,680
before the aggregation.
Consolidated shareholders’ equity amounted to SEK 3,469 M
(6,112) at the end of 2010, of which SEK 3,469 M (6,109) was
attributable to the Parent Company’s shareholders.
Financial risks
Taxes
The Group-wide financial policy that was adopted by the
Board of Directors provides the foundation for the management of financial operations, the division of responsibilities
and financial risks. The focus of Eniro’s risk management activities is to limit or eliminate financial risks in terms of costs,
liquidity and the company’s financial position. The subsidiary
Eniro Treasury AB has a centralized responsibility for handling
financing and risk management.
In November 2010, Eniro received the final ruling from the Norwegian tax authority, as a result of which the tax costs for the
period 2001-2005 in the subsidiary Eniro Holding AS (acquired
by Eniro in 2005) were increased by approximately SEK 105 M,
plus interest expense of SEK 3 M. Payment of the additional tax
and interest occurred in January 2011.
According to Eniro’s finance policy, the Board of Directors makes decisions pertaining to the hedging of transaction risks. In
connection with net investments in foreign currency, translation risks must be considered. Eniro has investments in NOK,
EUR, PLN and DKK, with the largest exposure in NOK. As part
of efforts to reduce exposure related to net investments in foreign currency, a portion of borrowing was taken in NOK, EUR
and DKK. Approximately 70 percent of the facility in NOK has
been swapped to fixed interest rate, and for corresponding
facility in SEK 50 percent was swapped to fixed interest rate.
For a more detailed description of risk management, see the
section on financial risk management in the accounting principles with the reference to the relevant notes.
Shareholder’s Equity
At the Extraordinary General Meeting on November 26 2010
the Board’s proposal to increase share capital through new
share issues with preferential rights for shareholders was
unanimously approved. A total of SEK 2,419 M was added to
the shareholder’s equity, net after issue costs adjusted for tax.
To enable the new issue, the AGM resolved upon a reduction
of the share capital by SEK 242,372,758.50 without withdrawing any shares, for provisions to a fund to be used according
to the AGM’s resolution, and an amendment to the share capital limits in the statues. The new issue increased Eniro’s share
capital by SEK 2,423,727,585 to SEK 2,504,518,505, of which
41,248,048 were registered in January 2011. The number of
shares increased by 4,847,455,170 to 5,009,037,009. The General Meeting resolved on a reverse split. The aggregation was
conducted on January 27, 2011, and meant that the company’s
36
The liquidation of the German company Eniro Windhager
GmbH was finalized in June 2010 and Eniro has been able to
use loss carryforwards in Sweden to offset Eniro’s profits in
Sweden during 2010. As a result, Eniro is not expected to pay
any income taxes in Sweden in the years ahead.
For the full-year 2010, Eniro recognized positive tax expense of
SEK 119 M (376).
Earnings per share
Net income per share amounted to SEK -248.43 (59.05) for 2010.
Legal issues
Eniro received a tax reassessment notice from the Norwegian
Tax Authorities at the end of May this year, regarding the years 2001-2005 for its subsidiary Eniro Holding AS (acquired by
Eniro during 2005), detailing an increase of taxable income,
potentially leading to increased tax costs. Eniro received a
final decision from the Norwegian Tax Authorities during November implying that the increased tax cost was set to around
SEK 105 million.
Personnel
On December 31, 2010, the number of full-time employees
was 3,929, compared with 4,994 at December 31, 2009. The
number of employees declined during the year by 1,065, of
which 392 related to the divestment and shutdowns of the
Finnish operations, The number of employees by country is
presented in the table below.
FULL TIME EMPLOYEES END OF PERIOD
2010
Dec 31
2009
Dec 31
Sweden
Norway
Denmark
Finland
Poland
1 334
799 377
381
1 038
1 625
914
433
783
1 239
TOTAL
3 929
4 994
Environment
Eniro promotes a systematic and targeted environmental
initiative and Eniro in Sweden and Norway are certified according to the ISO 14001 standard. In 2010, work focused primarily on environmental production and distribution of directories, transportation and waste reduction. The environmental
impact of directories in Sweden, Denmark and Norway have
been mapped along the entire value chain in order to place
the directory’s environment impact in a broader context. In
order to identify the environmental impact of Internet services, a life cycle analysis of Eniro’s online services has been
performed.
All company cars Eniro buys are environmentally friendly. This
has resulted in reduced fuel consumption and reduced costs for
the company. As far as travel is concerned, the target is to reduce the environmental impact of travel. Travelling is increasingly
being replaced with videoconferencing and teleconferencing,
which will save employees both time and travel expenses.
Eniro strives to adapt the directory circulation according to demand. Therefore, White Pages are distributed in Stockholm,
Gothenburg and Malmö only upon request. Citizens of Sweden
and Norway can choose not to receive Eniro’s directory. A further
measure to customize directory circulation is the elimination of
customers’ advance copy of the Yellow Pages in Sweden. Taken
together, these measures have led to reduced carbon emissions,
environmental benefits and savings.
Please see Eniro’s website at www.eniro.com for more information on Eniro’s environmental work.
Parent company
Operating revenues for 2010 totaled SEK 21 M (19). All operating revenues pertain to intra-group sales. Earnings before tax
amounted to SEK -1,821 M (1,444). Investments amounted to
SEK - M (2). The Parent Company’s external interest-bearing
net debt amounted to SEK 171 M (-) at year-end.
The Parent Company’s shareholders’ equity amounted to SEK
5,265 M (4,631) at the end of 2010, of which unrestricted
shareholder’s equity accounted for SEK 2,761 M (4,308).
The Parent Company Eniro AB (publ) had 26 full-time employees (19) at year-end.
Work of the company management and
Board of Directors
The Annual General Meeting of Eniro AB (publ) elected seven
members of the Board of Directors on 4 May 2010. Three employee representatives were appointed by the union. In addition
to the constituent meeting, six regular board meetings are normally held each year. During 2010, the Board held twentyone
meetings, of which five were per capsulam and eight were held
by telephone.
The combination of a high level of indebtedness and declining
sales resulted in limited operational and a financial flexibility
for Eniro in early 2010 and it was necessary to initiate a discussion with the lenders during in the beginning of June 2010.
Key focus of the year for the Board has accordingly been on
creating a financial flexibility to implement the previously developed strategy, and the following action plan was drafted:
1. Reduced debt
2. Increased focus on profitable operations
3. Continued cost reductions and commercial focus
Increased financial flexibility was achieved through a rights
issue during the last quarter of 2010 which strengthened the
balance sheet. A new credit facilities agreement was negotiated in connection with the rights issue.
The Board of Directors has a Compensation Committee and an
Audit Committee. During 2010, the Compensation Committee
consisted of Lars Berg (chairman) and Harald Strømme. The
Audit Committee comprised Barbara Donoghue (chairman),
Lars Berg and Karin Forseke. For a more detailed report on
the work conducted by the Board of Directors, see separate
Corporate Governance Report.
On September 6, 2010, Eniro’s Board appointed Johan Lindgren Group CEO and President of Eniro AB. Johan Lindgren
assumed his position with immediate effect and the former
president, Jesper Kärrbrink, resigned.
A new organization and Group management were presented in
November with the aim of increasing the focus on sales, further
enhancing the efficiency of product development and the delivery organization and supplementing the finance function.
Eniro’s Group management comprises the President and CEO,
Executive Vice President and Senior Vice President Group
Products & Services, Senior Vice President Group Sales Development, Senior Vice President Service Delivery, Senior Vice
President Group Controlling and Transformation, President of
Eniro Sweden, President of Eniro Norway, President of Eniro
Denmark, President of Eniro Poland, CFO, Corporate Communications Director and Human Resources Director.
Capital structure and dividend
At the end of 2010, Eniros financial net debt amounted to SEK
3,951 M compared with SEK 6,645 M at the end of 2009. The
37
net debt in relation to EBITDA, adjusted for other items affecting
comparability, amounted to 3.3 (3.9). The reduction in net debt in
2010 is mainly due to the new share issue that raised SEK 2,389
M net of issue costs. The goal of the capital structure is that the
net debt to EBITDA ratio should not exceed a factor of three.
Eniro’s dividend policy states that up to 50 percent of the
year’s net income can be distributed to the shareholders. The
Board of Directors will propose no dividend at the 2011 Annual General Meeting. The reason for not issuing a dividend
is a negative net income in 2010 due to impairments and the
restriction in the new credit facility. This is in line with the
company’s goal of a reduction of net debt in accordance with
the net debt/EBITDA target.
Principles on remuneration for
senior management
Senior management is defined as the President and CEO and
the Group management, a total of 12 persons.
With deviation, which is described below, Eniro has during
2010 applied the principles regarding the remuneration for
senior management as decided by the Annual General Meeting in May 2010. The Board of Directors’ proposal for 2011 is
generally in line with the principles for remuneration approved by the Annual General Meeting 2010.
The objective of the principles regarding the remuneration for
senior management is that Eniro shall offer remuneration in
line with market standards that enables Eniro to recruit as well
as to retain these persons within the Eniro Group. The remuneration for senior management consists of four parts; (1) fixed
salary, (2) variable salary, (3) long-term incentive program, and
(4) pension provisions and other remunerations and benefits.
1. Fixed salary
The fixed salary is based on the individual senior manager’s
area of responsibility, expertise and experience. The fixed salaries are frozen during 2011 and 2012 (except for change of
position, promotion etc.) for the senior management.
2. Variable salary
synthetic shares shall be issued under the program for synthetic shares established by the Annual General Meeting 2010.
Information regarding costs for variable salary 2011
The table below presents the costs for variable salary for 2011
(including costs for synthetic shares) at different outcomes,
based on the current composition of the senior management.
Costs, excluding social
security contributions
Share price does not change
Maximum increase
in share price
50% performance
100% performance
SEK 33 million
SEK 66 million
SEK 11 million
SEK 22 million
3. Long-term incentive program
At the Annual General Meeting 2005, with an adjustment at
the Annual General Meeting 2006, it was resolved to introduce
a share savings program for employees in the Eniro Group. This
program will be settled during 2011.
4. Pension provisions and benefits
Eniro’s policy for pension is based on either an individual pension plan or a premium-based pension plan with a maximum
of 35 percent of the fixed salary.
If termination is initiated by the Company, a notice period of
maximum 12 months applies. In addition to this, severance
pay may be paid for additionally maximum 6 months. For historical reasons there are three individual agreements where
12 months’ severance pay still applies. Other benefits, e.g.
company car and health insurance, shall be on market terms.
The Board of Directors may deviate from the principles if particular reasons are at hand.
The Board of Directors proposes that the Annual General Meeting 2011 shall resolve on these principles for the remuneration for senior management.
Deviations from the 2010 principles for remuneration for
senior management
The objectives for the variable salary shall be determined by the
Board of Directors each financial year, beginning January 1, 2011.
The objectives shall comprise the financial performance of the
Group, the result of corporate culture development and personal objectives of the individual participants. The variable salary
shall be made up of two equal parts – one cash component and
one synthetic share component. The variable salary will amount
to a maximum of 70 or 80 percent (the President and CEO,
100 percent) of the fixed salary depending on the manager’s
position. The variable salary shall be determined by the Board
of Directors based on an annual evaluation of the individual’s
performance in relation to the objectives. Payments of part of
the variable salary shall be conditional upon that the underlying objectives have been achieved on a long-term sustainable
basis. The Company shall have the right to claim repayment of
variable salary if a payment has been made on the basis of
information which later proves to be manifestly misstated. The
The Annual General Meeting 2010 authorized the Board of
Directors to deviate from the principles if particular reasons
would be at hand. The Board of Directors has decided to deviate from the principles in the cases and for the particular
reasons set forth below.
38
Due to the limited period of time that the President and CEO
Johan Lindgren was employed by the Company during 2010,
the President and CEO’s variable salary is entirely discretionary and proportionate to the four months period the President
and CEO was employed.
Significant agreements that are affected
by a public purchase offer
On November 30, 2010, Eniro entered into a new credit facilities agreement with the same bank consortium as under the
existing credit facilities agreement. The lenders’ obligation to
provide loans under the new credit facilities agreement is, inter alia, conditional on the Rights Offering being completed no
later than January 15, 2011 and that the net proceeds in full
will be used for repayment of existing loans. Refinancing of
existing credit facility was carried out on January 13, 2011.
If an owner, or group of owners, acquires more than 30 percent of the voting rights in the Company, the Company and the
banks in question must within 30 days come to an agreement
on continuation of the loan agreement. If an agreement is not
reached, the credit agreement can expire, and the outstanding
amount must be repaid.
Significant events after the closing date
Refinancing of existing credit facilities was carried out on January 13, 2011.
The rights issue implemented at the end of 2010 resulted in
the number of shares rising significantly. To achieve a more
appropriate number of shares in the company and to improve
transparency regarding pricing of the shares, a 50-to-1 reverse split was carried out in January 2011.
The reverse split was approved at an Extraordinary General Meeting held on November 26, 2010. As authorized by the General
Meeting, the Board set the record date at January 27, 2011.
Market outlook for 2011 and 2012
Operating revenues
For 2011 the company expects a single-digit organic revenue
decline. A turn around to organic revenue growth is expected
in 2012.
Costs
The total net cost reduction in 2011 is expected to be SEK 200
M compared to the cost base in 2010, excluding the effects
from the divestments and restructuring of the online and offline operations in Finland. In 2012, total costs are estimated to
be SEK 200 M lower compared to the total costs in 2011.
Capital structure
The target is a net debt in relation to EBITDA not exceeding a
multiple of three.
Dividend
Priority will be assigned to the reduction of net debt in accordance with the net debt/EBITDA target.
The Board of Director’s proposed
distribution of earnings
The following earnings for the parent company are available
for distribution at the Annual General Meeting:
SEK
Net loss
-1 994 222 352
Fund to be utilized according to decision by AGM 242 372 758
Share premium reserve
37 167 926
Earnings brought forward
4 474 802 552
Total
2 760 120 884
The Board of Directors proposes that total amount of 2,760,
120,884 SEK will be carried forward to 2011.
39
CONSOLIDATED INCOME STATEMENT
SEK M
Note
2010
2009
Gross operating revenues
Advertising tax
Operating revenues
1
Production costs
2,4
Sales cost
2,4
Marketing costs
2,4
Administration costs
2,4, 5,6
Product development costs
2,4
Other revenues
Other costs*
Impairment of non-current assets
9, 11
5 359
-33
6 633
-52
5 326
6 581
-1 582
-1 644
-641
-595
-263
138
-651
-4 264
-2 018
-1 872
-662
-606
-232
186
-59
-626
Operating income Financial revenues
7
Financial costs
7
-4 176
143
-706
692
119
-579
Earnings before tax Income tax
8
-4 739
119
232
376
INCOME FOR THE YEAR -4 620
Attributable to:
Parent company shareholders
-4 620
Non controlling interest
0
608
Earnings for the year
-4 620
Net income per share, SEK (agttributable to Parent Company’s shareholders)
- before dilution
-248,43
- after dilution
-248,42
Average number of shares before dilution, 000s
26
18 597
Average number of shares after dilution, 000s
26
18 598
608
616
-8
59,05
59,04
10 432
10 433
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
SEK M
Earnings for the year
-4 620
608
Other comprehensive income
Foreign currency translation differences
-824
Hedging of cash flow
-48
Hedging of net investments
570
Share savings program - value of employee’s income
-
Change in Non controlling interest
-3
Tax attributable to components relating to other comprehensive income
-137
900
626
-610
-2
-6
-2
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
-442
906
-5 062
1 514
Attributable to:
Parent Company shareholders
-5 059
-3
1 528
-14
Total comprehensive income for the year
-5 062
1 514
*Include capital loss on the sale of operations in Finland of SEK -626 M.
40
CONSOLIDATED BALANCE SHEET
SEK M
Note
2010-12-31
2009-12-31
ASSETS
Non-current assets
Tangible assets
9
84
124
Intangible assets
11
8 336
14 453
Deferred tax assets
8
323
281
Derivative instruments
16,24
-
327
Holdings in associated companies
22
10
4
Other receivables
24
91
46
Total non-current assets
8 844
15 235
Current assets
Work in progress
94
163
Accounts receivable
12,24
842
1 028
Prepaid costs and accrued revenues
13
206
239
Current income tax receivables
29
82
Other non-interest bearing current assets
12,24
115
73
Other interest bearing receivables
12,24
7
22
Cash and cash equivalents
14, 24
450
350
Total current assets
1 743
1 957
TOTAL ASSETS
10 587
17 192
SHAREHOLDERS EQUITY AND LIABILITIES
Equity
Share capital*)
2 504
323
Additional paid-in capital
4 767
4 529
Reserves
-132
307
Retained earnings
-3 670
950
Equity attributable to Parent Company’s shareholders
3 469
6 109
-
3
Total equity
26
3 469
6 112
Non-current liabilities
Borrowing
15,24
3 842
7 055
16,24
73
390
Retirement benefit obligations
17
212
200
Deferred income tax liabilities
8
353
635
Other provisions
18
34
6
Other non-interest bearing liabilities
2
55
Total non-current liabilities
4 516
8 341
Current liabilities
Accounts payable
24
173
305
Current income tax liabilities
190
199
Accrued costs and prepaid revenues
19
1 541
1 728
Other non-interest bearing liabilities 263
314
Other provisions
18
64
93
Borrowing
15,24
371
100
Total current liabilities 2 602
TOTAL EQUITY AND LIABILITIES
10 587
2 739
17 192
*) In 2010 non registered share capital of SEK 42 M registered January 2011 is included in share capital.
41
CHANGES IN GROUP EQUITY
Equity attributable to Parent Company’s shareholders
Non
Share
Other capital
Retained
controlling
Total
SEK M
Note
capital
contribution
Reserves
earnings
Total
interest
equity
Opening balance as per 1 January 2009
Income for the year
Hedging of cash flow after tax
Hedging of net investment after tax
Share-saving program
Divested holdings of non controlling interest -
Total income
185
-
-
-
-
-
-
2 285
-
-
-
-2
-
-
-607
-
463
-449
-
900
-
334
616
-
-
-
-
-
2 197
616
463
-449
-2
900
-6
17
-8
-
-
-
-
-6
2 214
608
463
-449
-2
900
-
-2
914
616
1 528
-14
1 514
Transactions with shareholders:
242
2 142
-
-
2 384
-
New share issue*)
Reduction in share capital
-104
104
-
-
-
-
2 384
-
Total transactions with shareholders
-
2 384
Closing balance as of 31 December 2009
26
323
4 529
307
950
6 109
3
323
4 529
307
950
6 109
3
Income for the year
-
-
-
-4 620
-4 620
0
Hedging of cash flow after tax
-
-
-35
-
-35
-
Hedging of net investment after tax
-
-
420
-
420
-
-
-
-824
-
-824
-
Divested holdings of non controlling interest
-
-
-
-
-
-3
6 112
6 112
-4 620
-35
420
-824
-3
Total income
-3
-5 062
Transactions with shareholders:
2 423
-4
-
-
2 419
-
New share issue*)
-242
242
-
-
-
-
2 419
-
Total transactions with shareholders
2 181
238
-
-
2 419
-
2 419
2 504
4 767
-132
-3 670
3 469
-
3 469
26
138
-
2 246
-
-
-439
-
-4 620
2 384
-5 059
*) In 2010 non registered share capital of SEK 42 M registered January 2011 is included in share capital. The share issue is reported net after costs of SEK M 101 (133) after tax.
42
CONSOLIDATED CASH FLOW STATEMENT
SEK M
Note
2010 2009
Current operations
Operating income
-4 176
692
Adjustment for items excluded from the cash flow
Depreciation, amortization and impairments of non-current assets 2
4 781
1 115
Provisions
-2
47
Profits from divestments of non-current assets
595
0
Other items not affecting liquidity
-45
47
Payments to pension fund
-
-30
Interest received
20
71
Interest paid
-383
-452
Fair value loss on derivative instruments
-197
-65
Income tax paid
-226
-56
Cash flow froom current operations before changes in working capital
367
1 369
Cash flow from changes in working capital
Decrease / increase in work in progress
52
39
Decrease / increase in current receivables
191
32
Decrease / increase in current liabilities
-238
-38
Cash flow from current operations 372
1 402
Investing activities
Acquisition of subsidiaries and associated companies
25
-
-43
Acquisition of intangible assets
11
-178
-205
Acquisition of tangible assets
9
-44
-45
Divestment of subsidiaries and associated companies
21,22
26
-7
Divestment of tangible assets
9
1
1
Cash flow from investing activities
-195
-299
Financing activities
New borrowing
328
130
Amortization of loans
-2 761
-3 556
New share issue
26
2 389
2 343
Cash flow from financing activities
-44
-1 083
Cash flow for the year
133
20
Cash and cash equivalents at the beginning of the year
Exchange rate differences in cash and cash equivalents
350
-33
319
11
Cash and cash equivalentsat the end of the year
450
350
14
43
PARENT COMPANY INCOME STATEMENT
SEK M
Note
2010
Operating revenues
1
21
Sales costs
2,4
-24
Marketing costs
2,4
-
2,4,5,6
-124
2,4,5,7
-
Other revenues
136
Other costs
-6
2009
Operating income 3
-108
Profit/loss from sales of shares in Group Company
Profit from sales of other shares
Dividends from Group companies
Dividends from associated companies
Write down of shares in Group companies
21
Financial revenues
7
Financial costs
7
40
0
540
0
-2 949
18
-194
0
0
2 426
-802
11
-292
Income after financial items -2 542
1 235
Appropriations
Earnings before tax
Income tax
8
721
-1 821
-173
209
1 444
49
Income for the year
Proposed dividend per share for the financial year
-1 994
1 493
-
-
Income for the year
-1 994
1 493
Other comprehensive income
-
-
Total comprehensive income
-1 994
1 493
19
-26
-6
-105
-20
30
0
PARENT COMPANY STATEMENT OF
COMPREHENSIVE INCOME
SEK M
44
PARENT COMPANY BALANCE SHEET
SEK M
Note
2010-12-31
2009-12-31
ASSETS
Non-current assets
Other intangible assets
11
2
Tangible assets
9
0
Shares in subsidiaries
21
8 905
Shares in associated companies
22
10
Deferred tax assets
231
Interest-bearing receivables with group companies
65
16
3
0
11 785
10
357
74
11
Total non-current assets
Current assets
Receivables from Group companies
Prepaid costs and accrued revenues
13
Current income tax receivables
12
12
Cash and cash eqiuvalents
14
9 229
12 240
702
17
2
61
1
1 010
2 579
9
56
1
0
185
Total current assets
1 793
2 830
TOTAL ASSETS
11 022
SHAREHOLDERS EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital*)
26
2 504
Non-restricted capital
Share premium reserve
-4
Reserve to be used in accordance with AGM decision
242
Retained earnings
4 517
Income for the year
-1 994
15 070
Total equity 5 265
Untaxed reserves
Tax allocation reserve
-
Provisions
Retirement benefit obligations
17
43
Other provisions
18
23
4 631
Total provisions
66
Liabilities to Group companies
5 036
Other non-interest bearing liabilities
-
23
7 538
53
Total non-current liabilities
5 036
7 591
Current liabilities
Accounts payable
13
Liabilities to Group companies
387
Accrued costs and prepaid revenues
19
67
Other non-interest bearing liabilities 2
Other provisions 18
15
Borrowing
15
171
Borrowing from group companies
-
13
362
17
2
10
1 701
Total current liabilities 655
2 105
TOTAL EQUITY AND LIABILITIES
11 022
15 070
323
2 142
104
569
1 493
720
23
-
*) In 2010 non registered share capital of SEK 42 M registered January 2011 is included in share capital.
45
CHANGES IN EQUITY, PARENT COMPANY
Reserve to
be used in
Share premium accordance with
Retained
Total
SEK M
Not
Share capital
reserve
AGM decision
earnings
equity
185
-
-
1 309
-
-
-
1 493
Group contributions paid, net after tax
-
-
-
-740
Share savings program - value of employees’ service
-
-
-
0
)
242
2 142
-
-
New share issue* Reduction in share capital
-104
-
104
-
26
323
2 142
104
2 062
323
2 142
104 2 062
-
-
-
-1 994
Transfer to retained earnings
-
-2 142
-104
2 246
Group contributions received, net after tax
-
-
-
209
-
-
-
0
2 423
-4
-
-
New share issue*)
-242
-
242
-
26
2 504
-4
242
2 523
1 494
1 493
-740
0
2 384
4 631
4 631
-1 994
209
0
2 419
5 265
*) In 2010 non registered share capital of SEK 42 M registered January 2011 is included in share capital. The share issue is reported net after costs of SEK M 101 (133) after tax.
Proposed dividend is 0 (0) SEK per share.
To make a new share issue possible, the General Meeting decided upon a decrease of the share capital by 242 372 758.50 SEK, without recalling shares, to place in a fund
for use as per the General Meeting’s decision, and change of the share capital’s limits in the articles of association. 46
PARENT COMPANY CASH FLOW STATEMENT
SEK M
Note
2010
2009
Current operations
Operating income
3
-108
Adjustment for items excluded from the cash flow
-102
0
Interest received from Group companies
5
9
Interest paid to Group companies
-180
-279
Interest received external
2
2
Interest paid external
-1
0
Income taxes paid
-25
36
Cash flow from current operations before changes in working capital
-298
-340
Cash flow from changes in working capital
Decrease / increase in current receivables
-35
-17
Decrease / increase in current liabilities
-5
5
Cash flow from current operations -338
-352
Investing activities
Acquisition of subsidiaries
-
-7
Divestment of subsidiaries
0
1
Acquistion of associated companies and other shareholders
0
Dividend from associated companies
-
0
Divestment of other share holdings
-
0
Acquisition of intangible assets
0
-2
0
-8
Financing activities
Net of Intra-Group dividends and paid in capital 504
745
Net changes in financial receivables and liabilities with group companies
651
-2 545
Net changes in external financial receivables and liabilities
-2 381
2
New share issue
26
2 389
2 343
1 163
545
825
185
Cash and cash equivalents at the beginning of the year
185
0
Cash and cash equivalents at the end of the year
14
1 010
185
47
ACCOUNTING PRINCIPLES
The current Annual Report for Eniro AB (publ)
with corporate registration number 5565880936 and registered office in Stockholm and
address SE 169 87 Stockholm, was approved
by the Board of Directors on 17 March 2011
and will be approved by the Annual General
Meeting on 29 April 2011.
SUMMARY OF IMPORTANT
•
•
General accounting principles for 2010
The Annual Report was prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by
the EU and IFRIC Interpretations, as well as the applicable statutes of the Swedish Annual Accounts Act and Recommendation RFR 1 Supplementary reporting rules for corporate groups
issued by the Swedish Financial Accounting Standards Council.
The application of general principles in many cases requires
estimates for accounting purposes and financial assessments
that have a great impact on balance sheet and income statement items. In Eniro’s case, this applies particularly to the
valuation of goodwill and intangible assets. In other cases, a
qualified interpretation and assessment must be made of how
the principles should be applied in the reporting of complex
business transactions. One such area is reporting of revenues.
A more detailed account of the assessments and interpretations with major impact on the consolidated accounts is
provided below under the heading Significant estimates and
assessments.
The Parent Company’s accounts were prepared largely according to the same principles as applied in the consolidated
accounts. The exceptions are primarily due to the Annual Accounts Act and the relation between accounting and taxation.
A more detailed description of these differences is provided
on the section Parent Company accounting principles.
NEW AND AMENDED STANDARDS ADOPTED FROM
1 JANUARY, 2010
•
48
IFRS 3 (Amendment), Business Combinations (effective
July 1, 2009). The amendment applies to acquisitions
after the effective date and stipulates changes in reporting of future acquisitions. For example, all payments
for acquiring businesses are to be recognized at fair value on the date of acquisition. Adjustments to the initial
purchase value are recognized in profit and loss. All tran-
saction costs concerning the acquisition are expensed.
The amendment will not affect previous acquisitions but
will affect the reporting of future transactions as of 1
January 2010.
IAS 27 (Amendment), Consolidated and Separate Financial Sta tements (effective from 1 July, 2009). The amendment requires that results relating to minority interests
should always reflect the minority shareholders’ proportionate interest, even if the minority interest is negative.
The amendment will affect the reporting of transactions
with noncontrolling interests from 1 January 2010.
IAS 38 (Amendment), Intangible Assets. The amendment
is part of the IASB’s annual improvements project. The
group will apply the amendment from the date IFRS 3 is
adopted. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a
business combination. The amendment will not result in
a material impact on the group’s financial statements.
The following standards, amendments and interpretations to
existing standards have been published and are mandatory
for periods beginning on, or after, January 1, 2010, but are estimated not to be relevant for the group.
•
•
•
•
•
•
•
IAS 32 (Amendment), Financial Instruments: Presentation
IAS 39 (Amendment), Financial Instruments: reporting
and assessment
IFRS 2 (Amendment), Share-related payment – Earned
benefits and deductions
IFRS 5, Non-current assets that are held for sale and discontinued operations
IFRIC 14, IAS 19 – The limit on a defined benefit asset,
minimum funding requirements and their interaction
IFRIC 17, Distributions of Non-cash Assets to Owners
IFRIC 18, Transfers of assets from Customers
NEW AND AMENDED STANDARDS FROM 2011
AND LATER
The following standards, amendments and interpretations to
existing standards have been published and are mandatory
for periods beginning on or after January 1, 2011, but has not
been adopted earlier.
•
IFRS 9, ‘Financial instruments’. IFRS 9 is the first standard
issued as part of a wider project to replace IAS 39. IFRS 9
retains but simplifies the mixed measurement model and
establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of
classification depends on the entity’s business model and
the contractual cash flow characteristics of the financial
•
•
•
•
•
asset. The guidance in IAS 39 on impairment of financial
assets and hedge accounting continues to apply.
IAS 24, ‘Related party disclosures’ (revised 2009) Amends
the definition of a related party and modifies certain related party disclosure requirements for governmentrelated entities, associated companies and joint ventures.
IAS 32 (Amendment) Financial instruments: Classification of rights issues’. The IASB amended IAS 32 to allow
rights, options or warrants to acquire a fixed number of
the entity’s own equity instruments for a fixed amount
of any currency to be classified as equity instruments
provided the entity offers the rights, options or warrants
pro rata to all of its existing owners of the same class of
its own non-derivative equity instruments.
IFRIC 19, ‘Extinguishing financial liabilities with equity
instruments’. Clarifies the requirements of IFRS when an
entity renegotiates the terms of a financial liability with
its creditor and the creditor agrees to accept the entity’s
shares or other equity instruments to settle the financial
liability fully or partially.
IFRIC 14 (Amendment) – ‘The limit on a defined benefit
asset, minimum funding requirements and their interaction’. Removes unintended consequences arising from
the treatment of prepayments where there is a minimum
funding requirement. This results in prepayments of contributions in certain circumstances being recognized as
an asset rather than an expense.
None of the amendments effective as from January 1, 2011,
are expected to have a significant impact on the Company’s
financial result or position. The impact of amendments IFRS 9
have not yet been evaluated.
CONSOLIDATED ACCOUNTS
interest is reported as the share of the subsidiaries’ equity
held by external shareholders. This item is recognized as part
of the Group’s shareholders’ equity. The minority share is
recognized in the income statement. Information about the
minority share of profits is disclosed in conjunction with the
income statement.
Group-internal transactions and balance sheet items, as well
as unrealized gains on transactions between Group companies
are eliminated. Unrealized losses are also eliminated, unless
the loss corresponds to a need to recognize an impairment.
Untaxed reserves, which occur in the accounts of companies
in certain countries, are reported in the consolidated accounts
in part as a deferred tax liability and in part as retained earnings. The deferred income tax liability is calculated according
to the prevailing tax rate in each country.
NON CONTROLLING INTEREST
Non controlling interest are those companies in which the
Group has a share of the voting rights between 20 and 50
percent and thus a significant influence. Holdings in non controlling interest are reported in accordance with the equity
method.
The Group’s share of the income in non controlling interest
after acquisition is reported in the income statement. Accumulated changes after the acquisition are reported as a change
in the carrying amount of the holding.
Unrealized gains and losses on transactions between the Group
and its non controlling interests are eliminated against the
Group’s holdings in the non controlling interest.
The consolidated accounts include the Parent Company and
its subsidiaries. Subsidiaries are considered companies in
which the Parent Company directly or indirectly has the right
to determine financial and operative strategies in a manner that normally results from a shareholding greater than
or equal to 50 percent of the voting rights. Subsidiaries are
included in the consolidated accounts from the date on which
the controlling influence was transferred to the Group. They
are eliminated from the consolidated accounts on the date
from which this controlling influence ceases.
JOINT VENTURE
Eniro’s consolidated accounts have been prepared in accordance with the purchase method. The purchase price for an
acquisition consists of the fair value of the assets provided as
payment, issued equity instruments and accrued or assumed
liabilities on the date of transfer of ownership increased by
costs directly attributable to the acquisition. Identifiable assets and liabilities in subsidiaries on the date of acquisition
are reported at fair value in the consolidated balance sheet
according to an acquisition analysis. If the acquisition price
exceeds the fair value of the company’s net assets on the
acquisition date, the difference is reported as consolidated
goodwill. If the acquisition price is less than fair value of the
acquired company’s net assets, the difference is recognized
directly in the income statement.
TRANSLATION OF FOREIGN CURRENCY
A joint venture is defined as a contractual agreement in which
two or more parties initiate an economic activity that is subject to joint control. This may take the form of jointly owned
companies that are controlled jointly. Joint ventures are consolidated according to the proportional method. Accordingly,
the Group’s share of the joint venture’s income statement and
balance sheet are included under the corresponding items in
the consolidated accounts.
Financial reporting takes place in the currency used in the
area in which each Group company is primarily active. This is
the unit’s functional currency. In the consolidated accounts,
SEK is used, which is the Parent Company’s functional and
reporting currency.
In companies that are not wholly owned subsidiaries, minority
Transactions in foreign currency are translated to the functional currency according to the exchange rates applying on
the transaction date. Gains and losses arising in payments for
such transactions and in the translation of monetary assets at
the closing-date rate are reported in the income statement.
Exceptions are transactions that constitute hedges and which
satisfy the conditions for hedge accounting of cash flows or
net investments. Such gains or losses are booked directly in
49
other comprehensive income.
Income statements and balance sheets for subsidiaries with
another functional currency than SEK are translated as follows:
•
•
•
ssets and liabilities are translated at the closing-date rate.
A
Revenues and costs are translated at the average rate or,
if this does not provide a reasonable approximation, at
the weighted average rate.
Exchange-rate differences are reported as a translation
difference in other comprehensive income.
In the consolidated accounts, exchange-rate differences attributable to net investments in foreign operations, or borrowing
and other currency instruments identified as hedges for such
investments, are charged to other comprehensive income.
When foreign operations are divested, such exchange-rate
differences are reported in the income statement as part of
the capital gain or loss. Goodwill and other adjustments of fair
value arising in the acquisition of foreign operations are treated as assets and liabilities in that operation and translated at
the closing-date rate.
TANGIBLE ASSETS
Tangible assets are reported at acquisition cost. The acquisition cost includes expenses that can be directly attributable to
the acquisition of the asset. Depreciation occurs linearly over
their estimated useful life. This varies between three and five
years for equipment. Equipment consists primarily of computer equipment, office fittings and vehicles. The residual value
of assets and their useful life are assessed on every closing
date and adjusted as necessary.
INTANGIBLE ASSETS
Goodwill consists of the amount by which the acquisition value
exceeds the fair value of the Group’s share of the acquired subsidiary/associated company’s assets on the acquisition date.
Goodwill arising from the acquisition of operations in foreign
subsidiaries is reported as a separate item under intangible
assets. Goodwill arising from the acquisition of associated
companies is included in the value of the associated company.
Goodwill is assumed to have an indefinite useful life.
Other intangible assets with indefinite useful life consist of
brands that were added through acquisitions. Goodwill and
other intangible assets with indefinite useful life are assessed
annually to identify possible impairment losses and are reported at acquisition value reduced by accumulated impairment
losses. Gains or losses arising from the divestment of a unit
include the residual carrying amount of goodwill and other intangible assets attributable to the divested unit.
Customer relations and other intangible assets are reduced by
amortization over their useful life. The useful life for customer
relations is based on repurchasing frequency and varies between three and seven years. Other brands have a predictable
useful life that varies between five and ten years.
Eniro and provide economic benefits over a period longer than
one year and which exceed the costs of their acquisition and
development.
Other intangible assets are measured at cost less accumulated
amortization. The capitalized expenses are amortized linearly
over the assessed useful life. This varies between three and ten
years. Capitalized expenses include personnel costs and a reasonable share of attributable indirect costs.
IMPAIRMENT
Assets with an indefinite useful life are not amortized, but
rather tested each year for possible impairment or whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. Assets considered for impairment are assessed whenever there is an indication that the
assess may be impaired. An impairment loss is recognized in
the amount that the asset’s carrying amount exceeds its recoverable value. Recoverable value is the higher of an asset’s fair
value reduced by sales costs and its value in use. In impairment testing, assets are grouped at the lowest level at which
separate cash-generating units can be identified.
FINANCIAL ASSETS
Financial assets are classified in the following categories:
•
•
•
Financial assets valued at fair value in the
income statement;
Loans and accounts receivable;
Financial assets held for sale.
Financial assets valued at fair value over the income statement
consist primarily of assets intended to be sold shortly. At the
end of 2010 there are no assets in this category. Loans and accounts receivable are nonderivative financial assets with fixed
or predictable payments and are not listed on an active market.
Loan receivables are insignificant in scope.
Financial assets held for sale are non-derivative financial assets
in which the assets have been identified as available for sale or
not classifiable in any other category. At the end of 2010 there
are no assets in this category.
Purchases and sales of financial assets are reported on the date
at which Eniro pledges to purchase or sell the asset. Financial
assets are initially valued at fair value plus transaction costs.
Financial assets valued at fair value in the income statement
are valued without transaction costs. Financial assets are eliminated from the balance sheet when the right to receive cash
flows from the instrument has expired or virtually all risks and
benefits associated with the asset have been transferred to another party.
Loan receivables and financial assets held to maturity are reported at accrued acquisition value by applying the effective
interest method.
Other intangible assets primarily consist of software, databases
and publication rights of a unique nature that are controlled by
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an
50
intention to settle on a net basis.
WORK IN PROGRESS
The value of work in progress consists of direct production costs
and attributable indirect production costs. Costs for borrowing
are not included. For printed directories direct production costs
primarily relate to paper purchases, printing and binding of
directories, as well as costs for obtaining and processing information for publication in printed directories. An individual
assessment is made for expensed amounts for each individual
directory. For internet services the direct production costs
mainly refers to cost for layout of advertisement.
ACCOUNTS RECEIVABLE
Accounts receivable are valued at fair value, which normally
corresponds to the invoiced amount. Thereafter, accounts receivable are valued at acquisition value without discounting and
reduced by any credit risk reserves. No discounting is reported,
since the average credit period is short and interest thus insignificant. Credit risks are handled through active credit checks
and routines for follow-up and debt collection. In addition, the
depreciation reserves are assessed regularly based primarily on
actual losses in previous years and taking into account current
payment patterns. Amounts that are not expected to be received are offset by reserves and reported as sales cost in the
income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and disposable funds
in bank accounts, as well as current investments with a shorter
period than three months from the acquisition date. The parent
company’s cash and cash equivalents include balances on the
Group accounts.
EQUITY
Consolidated shareholders’ equity is divided into share capital, other capital contribution, reserves and earnings brought
forward.
Holdings of treasury shares purchased within the framework
approved by the Annual General Meeting are reported in the
consolidated accounts as a reduction of other capital contributions. In the Parent Company, these are booked as a reduction
of retained earnings or, where applicable, against a fund to be
used in accordance with decisions by the Annual General Meeting. Costs in addition to the purchase price arising in conjunction with the acquisition of own shares are charged against
retained earnings. This holding is not included in outstanding
shares when calculating key data per share.
amount received after transaction costs and the amount repaid is reported in the income statement and distributed over
the maturity period by applying the effective-interest method.
Borrowings are classified as current liabilities if Eniro does not
have an unconditional right to defer payment until at least 12
months after the closing date. Liabilities with maturity periods
that originally exceeded 12 months are also reported as current
liabilities according to this principle.
RECOGNITION OF DERIVATIVE INSTRUMENTS
AND HEDGING MEASURES
Derivative instruments are recognized in the balance sheet on
the contract date and valued at fair value both initially and on
subsequent revaluations. Derivative instruments within Eniro
consist either of hedges of fair value and cash flows or hedges
of net investments in foreign currency. For the time being there
are no hedges of fair value within the Group.
When a hedging contract is entered, Eniro documents the relationship between the hedging instrument and the hedged
item, as well as the effectiveness of the derivative instrument
employed in balancing fair value or cash flow for the hedged
items. Fair value of derivative instruments is presented in Note
16. Changes in hedging reserves in shareholders’ equity are
presented in Note 26.
Hedging of fair value
Changes in value of derivatives employed to hedge fair value
that satisfy the conditions for hedge accounting are reported
in the income statement together with changes in value of the
hedged asset or liability.
If a hedge no longer fulfills the criteria for hedge accounting,
the adjustment of the carrying amount of a hedged item will
be distributed in the income statement over the remaining maturity period.
The effective portion of changes in value of derivatives employed to hedge cash flows that satisfy the conditions for
hedge accounting are reported in other comprehensive income. The gain or loss attributable to the ineffective portion
is immediately reported in the income statement under the
item Financial cost.
Borrowings are initially reported at fair value as a net amount
after transaction costs. Thereafter, borrowings are reported
at accrued acquisition cost, and any difference between the
Accumulated amounts in other comprehensive income are
reversed in the income statement in the periods in which the
hedged item affects income. If the hedged transaction results
in the reporting of a non-financial asset or liability, gains or
losses previously reported in other comprehensive income are
transferred from other comprehensive income and included in
the value of the asset or liability. Even when a hedging instrument expires or is sold or when the hedge no longer satisfies
the conditions for hedge accounting and accumulated gains or
losses are included in other comprehensive income, the accumulated amount is reversed, since the hedged item affects income. If the hedged transaction is no longer expected to occur,
the accumulated amount is immediately booked against other
51
BORROWINGS
comprehensive income.
SEGMENT REPORTING
Hedging of net investments in foreign operations is reported in
a similar manner as hedging of cash flows. The effective portion
of the hedge is reported under other comprehensive income,
while the ineffective portion is immediately recognized in the
income statement under the item Financial cost.
Effective 1 January 2009, segment information is reported according to IFRS 8, Operating segment. IFRS 8 requires segment
information to be presented in accordance with how financial
information is presented internally to the chief operating decision-maker. The chief operating decision-maker is the function
responsible for allocating resources and assessing performance
of the segments. In Eniro this function consists of the Group
Management.
Accumulated gains and losses under other comprehensive income are reported as a portion of the capital gain or loss when
a foreign unit is divested.
PROVISIONS
Provisions refer to debts that are uncertain with respect to their
amount or the date on which they will be settled. Provisions are
reported when the Group has a legal or informal obligation resulting from previous events and it is more likely that payment of
provisions will be required to settle the obligation than the opposite and the amount can be calculated in a reliable manner.
Provisions primarily relate to pension commitments, deferred
income tax liabilities, costs in conjunction with changes in personnel, legal proceedings and disputed selective tax. Amounts
expected to be settled within 12 months after the closing date are
reported under the heading current liabilities, while others are reported as non-current liabilities. The reserved amounts comprise
the best estimate of what would be paid out on the closing date
to settle the obligation or to transfer it to a third party.
ACCOUNTS PAYABLE
Accounts payable is recognized initially at fair value and subsequently measured at amortized cost using the effective interest
method.
REVENUES
As of 2010, a joint sales force sells combination packages that
include all of Eniro’s distribution channels. This is a difference
compared with previous year when separate sales forces sold
online and printed products, respectively, and where only a small
portion of sales (basic listing) in Sweden and Norway was sold
as a bundled product. Sales of the new combination packages
began in February 2010 in Sweden and Norway and will gradually comprise a greater share of the Group’s sales.
The Eniro Group has two main principles for revenue recognition. Revenues attributable to Internet services (online) are
distributed over the period during which the service is provided,
normally 12 months (deferral method). Revenues from Directories (offline) are recognized when the directory is published
(publication method). Revenues from the combined packages
will be distributed according to the revenue-recognition principles based on the value of commercial use either derived from
price lists or customer surveys. The outcome of the two revenue
recognition methods is dependent on the value of the composition of the packages. Revenues from 118 services (Voice) are
recognized when the service is delivered.
52
From 2010 segment information is presented for the segments:
Directories Scandinavia, Voice Scandinavia and Poland/Finland.
The financial reporting reflect the organization that was presented in October 2009 with three Scandinavian transnational
functions: Product and Services, with responsibility for development of products and concepts, Operations, with responsibility
for the Group’s local production and local support functions,
and Sales, with responsibility for the Group’s sales. The Voiceoperation and the operations in Finland/ Poland are governed
separately and are not part of the functional organization of Directories Scandinavia. The assessment of the performance will
internally be made on the directory operation as a whole, which
will result in no reporting of separate financial information for
online respectively offline. The segment reporting has changed
from 2009, where the organisation reported for the segment
Online, Offline Media and Voice. This change in financial reporting is in line with the organisational changes and based on
the management´s monitoring of financial trends.
From 2011, Eniro’s remaining operations in Finland will be reported in the segment Scandinavia Voice.
DISCONTINUED OPERATIONS
Operations that were cash-generating units during the time
that they were owned or group of such units that were either
divested or are held for sale are reported in accordance with IFRS
5 Non-current Assets Held for Sale and Discontinued Operations.
In cases where the unit remains within the Group on the closing
date, all assets are reported as current assets and liabilities directly attributable to operations as current liabilities.
Income after tax from such operations under the period of
ownership and capital gains or losses in conjunction with the
completion of a sale are reported as an item in the income statement. Non-current assets held for sale are reported at the
lower of carrying amount and fair value reduced by sales costs,
assuming that their carrying amount is recovered primarily through a sales transaction and not through constant use.
COMPENSATION TO EMPLOYEES
Pensions
There are different pension plans within the Eniro Group. Swedish units are primarily covered by defined-benefit plans, while
the Norwegian and Finnish units are partly covered by definedbenefits plans. Units in other countries in most respects apply
defined-contribution plans.
For defined-contribution plans, the company pays fixed fees to
a separate legal entity and has no obligation to pay further fees.
Costs are charged against consolidated earnings in pace with
benefits being earned.
In defined-benefit plans, compensation is paid to employees
and former employees based on salary at the time of retirement
and number of years of employment. The Group assumes the
obligation for paying the promised compensation.
The defined-benefit pension plans are funded in one case and
otherwise unfunded. For the funded plan, the assets are allocated to a separate pension fund. The net of the estimated
current value of the commitments and the fair value of the plan
assets is reported in the balance sheet either as a provision or
as a long-term financial receivable. In cases where a surplus in
a pension plan cannot be fully utilized, only that portion of the
surplus is reported that the company is able to recover through
reduction of future fees or bonuses.
For defined-benefit plans, the pension cost and the pension
commitment are calculated according to what is called the Projected Unit Credit method. This method distributes the costs
for pensions over the period during which employees perform
work for the company that increases their entitlement to future
compensation. The calculations are performed annually by independent actuaries. The company’s commitments are valued
at the current value of anticipated payments after application
of a discount factor corresponding to the rate of government
bonds with a maturity corresponding to the commitment in
question. The most important actuarial assumptions are described in Note 17.
In establishing the current value of the commitment and the
fair value of managed assets, actuarial gains and losses may
arise. These occur either because the actual outcome differs
from previous assumptions or because the assumptions have
changed. That portion of the accumulated actuarial gains and
losses at the end of the preceding year that exceeds 10 percent of the current value of the largest commitment and the
fair value of the managed assets are reported in the income
statement over the employee’s average remaining period of
employment.
Interest cost reduced by anticipated return on plan assets is
classified as a financial cost. Other cost items in pension costs
are charged against operating income. If the pension costs and
the pension provisions determined for the Swedish plans in accordance with IAS 19 differ from the corresponding amount according to FAR 4, a cost is reported for special salary tax on the
difference in accordance with UFR 4.
The accounting principles described above for defined-benefit
pension plans are only applied in the consolidated accounts.
Stockholm Stock Exchange through monthly savings. Purchase
of savings shares takes place once each quarter for the amount
allocated. After a qualifying period of three years following the
purchase of savings shares, participants are allocated additional shares, called matching shares, without charge. In addition,
senior executives may receive performance-based matching
shares for each savings share based on their position and the
Group’s earnings (cash earnings per share).
The costs for the share savings program are reported in accordance with IFRS 2 Share-related benefits and the statement
UFR 7, IFRS 2 and social fees issued by the Urgent Issues Committee of the Swedish Financial Accounting Standards Council.
This means that the calculated value of the matching shares
and the calculated costs for social fees are capitalized over the
qualifying period. In estimating the fair value of the matching
shares, the share price for purchase of the savings shares is
used after deduction of the estimated dividend during the
qualifying period. In estimating the fair value of social fees, the
most recent share price is used to calculate social fees for all
possible matching shares on every closing date.
The 2006 Annual General Meeting approved a share price-related incentive program directed towards the President, Group
management and certain key persons. The incentive program
was updated at the Annual general meeting 2010 and means
that a maximum of 35 to 40 percent of fixed salary is reserved for allotment of what are called synthetic shares. For the
President and CEO 50 percent of the fixed salary is reserved
for synthetic shares. The number of synthetic shares, which
corresponds to the amount calculated for each participant, is
based on the average paid price of the Eniro share on the five
trading days after the record date.
After three years (not as before two years), assuming that the
participant is employed by Eniro on that date, the holding of
synthetic shares and dividends is converted to a cash payment.
The maximum amount to be paid out for each synthetic share
shall be limited to five times the share price at the time of the
conversion to synthetic shares. The Board of Directors shall be
authorised to make adjustments necessary in order for the financial outcome of the synthetic shares to reflect among other
things dividends or changes in the share capital. The conversion
of variable salary into synthetic shares shall be made in 2011
and the payment, if any, from such synthetic shares shall be
made in 2014.
Accordingly, this does not involve compensation in the form of
Eniro shares. Instead the Eniro share can be seen as an index
that regulates the amount of the cash compensation. Funds are
reserved regularly in a manner similar to other variable compensation. The reserve is based on the current Eniro share price
plus social costs.
Taxes
In the consolidated accounts, both current and deferred income
taxes are reported.
Share-related benefits
The Eniro Group offers a share-savings program to permanent
employees in Sweden, Norway and Finland, as well as to senior
executives in Poland and Denmark. Through the program, employees are invited to purchase Eniro shares on the Nasdaq OMX
In reporting income taxes, the balance sheet method is applied
in accordance with IAS 12 Income Taxes. According to this method, deferred income tax liabilities and receivables are reported
53
for all temporary differences between carrying amounts and
values for tax purposes of assets and liabilities. Additional deferred income tax liabilities are reported when it is considered
probable that there will be loss carryforwards that can be used
in the future. Deferred income tax liabilities and receivables are
estimated on the basis of the anticipated tax rate on the expected date for reversal of the loss carryforward. The effects of
changes in prevailing tax rates are booked during the period in
which the change is adopted. No deferred taxes are reported on
temporary differences relating to shares in subsidiaries.
LEASING AGREEMENTS
Leasing agreements are reported in accordance with recommendation IAS 17 Leases. Leasing in which a significant portion
of the risks and benefits incident to ownership are retained by
the leaser are classified as operational leasing. Payments made
under the operating leases are charged to the income statement on a straight-line basis over the period of the lease. Currently the Group only has operational leasing agreements.
THE PARENT COMPANY’S ACCOUNTING PRINCIPLES
The annual report for a legal entity must be prepared according
to the Swedish Annual Accounts Act and recommendation RFR
2.2 Reporting of legal entities issued by the Swedish Accounting
Standards Council. The Swedish Financial Accounting Standards
Council in recommendation 2.2 has stated that legal entities
whose securities are exchange-listed should apply the same
IFRS/IAS rules as applied in the consolidated account. There are
certain exceptions and amendments to this general rule.
For the Parent Company Eniro AB, the following deviations from
IFRS/IAS are applied with the support of RFR 2.
•
•
•
•
•
54
IAS 1 Presentation of Financial Statements is not applied
in the preparation of the balance sheet and income statement, which are instead prepared in accordance with the
Annual Accounts Act.
IAS 12 Income Taxes is not applied to untaxed reserves,
which are reported as gross amounts in the balance
sheet. Changes in untaxed reserves are reported in the
income statement.
IAS 17 Leases is not applied for financial leasing. At present, there are no financial leases in the Parent Company.
IAS 19 Employee Benefits is not applied in the reporting
of pension commitments and pension costs, which are
instead reported in accordance with FAR’s recommendation 4 Reporting of pension liabilities and pension costs.
The Parent Company has defined-benefit pension commitments to employees. The Parent Company’s future obligation to pay pensions thus has a current value determined
for each employee in part by pension level, age and to the
degree a full pension has been earned. This current value is
calculated on actuarial principles and is based on the salary
and pension levels applying on the closing date. Pension
commitments are reported as a provision in the balance
sheet. The interest portion of the year’s pension costs are
reported as a financial expense. Other pension costs are
charged against operating income.
IAS 39 Financial Instruments: Recognition and Measurement
is not applied with respect to financial guarantee agreements
on behalf of subsidiaries and associated companies.
FINANCIAL RISK MANAGEMENT
Financial risks
The group-wide financial policy that was established by the
Board of Directors is the basis for handling financial operations,
assigning responsibility and managing financial risks. The focus
of Eniro’s risk management is to eliminate financial risks, with
consideration taken for costs, liquidity and financial position.
The subsidiary Eniro Treasury AB has central responsibility for
handling financing and risk management.
Currency risk
Apart from Sweden, Eniro conducts business in Norway, Denmark, Finland and Poland. The currency risk may be divided into
the translation risk and the transaction risk. The translation risk
is the risk that the value of the SEK, in terms of net investments
in foreign currency, will fluctuate due to exchange-rate changes. The transaction risk pertains to the impact on net profit
and cash flow resulting from changes in the value of operating
flows in foreign currency due to exchange-rate changes.
According to Eniro’s finance policy, decisions regarding hedging
against foreign exchange risks are made by the Board of Directors. The translation risks of net investments in foreign currencies
should be taken into consideration. Eniro mainly has investments
in NOK, EUR, PLN and DKK with the largest exposure in NOK. One
way to reduce the risk exposure of net investments in foreign
currencies has been to do part of the borrowing in Norwegian
kroner, Euro and Danish kroner. In total, external loans in foreign
currency at December 31, 2010 amounted to NOK 1 978 M, EUR
80 M and DKK 400 M. If the foreign exchanges rates had been 10
percent higher/lower at the end of 2010 in relation to SEK, the
equity would have been SEK 256 M (933) higher/lower.
For more details about borrowing, see Note 15 and exposure to
shareholders’ equity, Note 26.
Transaction risks in each geographic region are limited, because
relatively few contracts are denominated in a currency other
than that of the particular country’s reporting currency. Major purchasing contracts in foreign currency are interest ratehedged on a case-by-case basis. Of EBITDA in 2010, 9 percent
(48 percent) was derived from operations with currencies other
than SEK (NOK 89% (38%), EUR -90% (2%), PLN 8 % (5 %)
and DKK 2% (3%). If the foreign exchanges rates had been 10
percent higher/lower on average in relation to SEK, EBITDA for
2010 would have been higher/lower by SEK 5 M (87). Result
after tax would have been SEK 270 M (73) higher/lower. The
Group’s exposure for changes in foreign currency against SEK
are monitored and analyzed regularly.
Interest-rate risk
Interest-rate risks pertain to the risk that net profit will be affected by changes in general interest rates. According to Eniro’s
finance policy, the Company’s financial position must be taken
into account when selecting interest-rate maturities. The interest rate duration must never exceed four years.
The relatively high debt level entails exposure to Interest-rate
risk, since borrowing is at floating interest rates. The interestrate is reduced by hedging a portion of future interest payments
through interest swaps that convert floating interest to fixed interest. Interest-rate swaps mean that Eniro enters agreements
with other parties (credit institutions), usually on a quarterly
basis, to exchange the difference between the interest amount
according to a fixed interest contract and the floating interest
amount. Of the total interest-bearing net debt, NOK 1 350 M
and SEK 360 M is hedged with swaps, meaning that 45 percent
(62) of the outstanding amount according to the loan facility is
hedged until maturity. The interest-rate period at December 31,
2010 was 1.6 years (1.8).
The Group continuously analyzes its exposure to interest-rate
risk. Simulations of interest-rate changes are performed regularly. A change of market interest rates of 100 points (1 percentage point) would, in consideration to the current interest
swaps, have an positive/negative effect of SEK 23 M (25) on the
Group’s interest expenses based on current debt at December
31, 2010 The result after tax would have been SEK 17 M (18)
higher/lower. An increase of market interest rates of 100 points
would increase the market value of interest swaps and equity
with SEK 19 M (105). A decrease of market interest rates of 100
points would decrease the market value of interest swaps and
equity with SEK 19 M (108).
Credit risk
The credit risk pertains to the risk that a counterparty will be
unable to fulfill its commitments and thus resulting in a loss
for the counterparty. Eniro’s counterparties in derivative transactions are exclusively credit institutions with a high official
credit rating. Surplus liquidity may only be invested in Swedish
government securities, certificates with a rating of (AAA/P1)
and with banks with a high official credit rating. At yearend, all
surplus liquidity was invested in banks.
Eniro is exposed to the risk of not being paid by its customers.
However, the risk of extensive bad debts is limited because Eniro’s
customer base is extremely large and well differentiated.
Liquidity risk and financing risk
Liquidity risk is the risk that difficulties will arise in fulfilling
financial obligations due to a lack of available funds. Financing
risk pertains to the risk that external financing will not be avaiDecember 31, 2009 SEK M
Bank loans
Accounts payables and other liabilities
December 31, 2010 SEK M
Bank loans, existing loan agreement
Bank loans, new loan agreement
Accounts payables and other liabilities
lable when needed and that the refinancing of maturing loans
will be impeded or become costly. Eniro is continuously working
to ensure that cash and cash equivalents and unutilized credit
facilities are available. Eniro’s goal is that 60 percent of available loan facilities will mature later than one year. Eniro also
has a stated objective of developing relations with several credit
institutions with a high rating. The Board of Directors regularly
receives rolling forecasts for the Group’s future cash flows that
include estimations of cash and cash equivalents and unutilized
credit facilities. The cash flow forecasts are based on information from the Group’s operating companies.
The table below shows Eniro’s financial liabilities and the net of
regulating derivative instruments that constitute financial liabilities broken down by contracted maturity date. The amounts
specified are non-discounted cash flows. Amounts falling due
within one year correspond to carrying amounts, since the discount effect is insignificant.
CAPITAL STRUCTURE
Eniro has as its goal to achieve an efficient capital structure, with
consideration of operating and financial risk that will facilitate
long-term development of the company while providing satisfactory returns to shareholders. To adjust the capital structure, the
company can change the dividend to the shareholders, repay capital to the shareholders, issue new shares or change borrowing.
The goal of the capital structure is that the net debt to EBITDA
ratio should not exceed a factor of three. Eniro’s dividend policy
states that up to 50 percent of the year’s net income can be
distributed to shareholders. The Board of Directors is proposing
no dividends to be issued for the financial year 2010. The reason for not issuing a dividend is the company’s goal of a lower
debtequity ratio.
The key ratio that the company management and external
stakeholders primarily assess with respect to capital structure
is interest-bearing net debt in relation to operating income
(EBITDA).
At the end of 2010, interest-bearing net debt in relation to
EBITDA, excluding other items affecting comparability, was 3.3
(3.9).
Maturing within 1 year Maturing within 1 and 5 years
Maturing later than 5 years
Total
178
159
305
7 509
261
-
-
-
-
7 687
420
305
642
7 770
-
8 412
Maturing within 1 year Maturing within 1 and 5 years
Maturing later than 5 years
Total
4 215
522
48
173
-
4 956
36
-
-
-
-
-
4 215
5 478
84
173
4 958
4 992
-
9 950
When calculating the amounts in the table above, the assumption was made that the currency rates and the market interest at the end of each period are unchanged.
55
FAIR VALUE ESTIMATION
than the reported value.
Effective 1 January 2009, the group adopted the amendment
to IFRS 7 for financial instruments that are measured in the
balance sheet at fair value, this requires disclosure of fair value
measurements by level of the following fair value measurement
hierarchy:
• Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices)
(level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
If the annual future cash flow had been 10 percent lower than
management’s assessment, an impairment loss relating to
the cash-generating unit Norway Directories would need to
be recognized in an amount of SEK 418 M and in Poland in an
amount of SEK 38 M. For other units, the value in use would still
be higher than the reported value.
As of December 31, 2010, Eniro has only derivatives that are
used for hedging purposes that are classified according to the
above fair value measurement hierarchy. Fair value for these interest swaps and interest and currency rate swaps is calculated
as the present value of future cash flows on observable yield
curves. These instruments are classified on level 2 and the fair
value as of December 31, 2010 amounted to SEK 73 M (liabilities). See also Note 16 Derivative instruments.
SIGNIFICANT ESTIMATES AND ASSESSMENTS FOR
ACCOUNTING PURPOSES
Estimates and assessments are continuously evaluated and based on historical information and future assessments that are
deemed reasonable under the prevailing circumstances.
SENSITIVITY ANALYSIS FOR CERTAIN ASSUMPTIONS
IN VALUATION OF SIGNIFICANT ITEMS
In valuing balance-sheet items, assumptions are made that may
deviate from the final outcome. Such assumptions that may entail significant risk for the revaluation of important items are
discussed below.
Assessment of goodwill
The reported value of goodwill at December 31, 2010 amounted
to SEK 6 494 M (12 088). In the impairment testing of goodwill certain assumptions must be made. The recovery value for
cash-generating units is determined by calculating the value in
use. See further information in Note 11.
From 2010, impairment test of goodwill is made for the cash
generated units Sweden Directories, Norway Directories and
Denmark Directories in segment Directories Scandinavia, Sweden Voice and Norway Voice in segment Voice Scandinavia and
Poland and Finland. The highest goodwill amount is attributable to the acquisition of the Norwegian company Findexa in
2005. The development of the performance of the operations in
Norway is important for future impairment tests.
Assessment of brands
The reported value of brands amounted to SEK 917 M (998) at
December 31, 2010 and corresponded to the value of brands
added through acquisitions. The brands in question are Gule
Sider, Ditt Distrikt and Krak. No impairment has been recognized in 2010 for any brands. In 2009 an impairment loss of
SEK 67 M on the brand Telefonkatalogen (Norway) has been
recognized due to legislative changes regarding distribution
(information regarding private persons). The recovery value for
brands is determined by calculating the useful value. Essential
information for assessing the value of brands are the cash flow
that they generate and their measured recognition. The brands
in question are used for both Norway Directories and Denmark
Directories.
SIGNIFICANT ASSESSMENTS IN APPLICATION OF
Revenues
Revenues from directories are booked on publication. All European competitors apply this principle or close equivalents. Revenues from the sale of bundled products are distributed between
offline and online revenues according to a distribution ratio that
reflects the market value of each product.
As of 2010, a common sales force will begin selling combination
packages that include all of Eniro’s distribution channels. This
is a difference, compared with previous years when separate
sales forces sold online and printed products, respectively, and
where only a small portion of sales (basic listing) in Sweden
and Norway was sold as a bundled product. Sales of the new
combination packages will begin in February 2010 in Sweden
and Norway and will gradually comprise a greater share of the
Group’s sales.
The Eniro Group has two main principles for revenue recognition. Revenues attributable to Internet services are distributed
over the period during which the service is provided, 12 months
in the normal case. Revenues from directories are recognized
when the directory is published. Revenues from the combined
packages will be distributed according to the two revenuerecognition principles based on the value of commercial use.
The outcome of the two revenue recognition methods will be
reported quarterly from Q1 2010 and is dependent on the value
of the composition of the packages.
If the WACC used for discounted cash flow was 1 percent higher
than management’s assessment, an impairment loss relating to
the cash-generating unit Norway Directories would need to be recognized in an amount of SEK 545 M and in Poland in an amount
of SEK 37 M. For other units the value in use would still be higher
56
NOTES
NOTE 1 INFORMATION PER SEGMENT
The organization is based on Directories Scandinavia, Voice Scandinavia and Finland and Poland and is reflected in the segment reports from 1 January 2010. At the end of 2009,
a new organisation was presented based on cross-border funstions for Sales, Product and Services, Operations and IT. This organization applies withing Directories Scandinavia
(Sweden, Norway and Denmark) and refers to operations that were formerly divided into Online and Offline Media. The Voice operations and operations in Finland and Poland are
managed separately and are not an integral part of the functional organisation. The year of comparison has been recalculated in accordance with the same segmentation. The
present segment reporting is a change from 2009, when the organisation reported for the business areas Online, Offline Media and Voice.
SEK M
Directories
Scandinavia
2010
2009
Voice
Scandinavia
2010
2009
Finland/
Poland
Other 1)
2010
2009
Operating revenues
Sweden 1 690
2 173
547
583
-
-
Norway 1 427
1 732
130
129
-
-
Denmark
596
781
-
-
-
-
Finland
571
752
Poland
365
431
Total external operating revenues 3 713
4 686
677
712
936
1 183
Internal operating revenues
-
-
-
-
-
-
Total operating revenues 3 713
4 686
677
712 936
1 183
EBITDA
941
1 486
274
195
-498
129
Assets and liabilities
Goodwill 4 649
8 851
1 221
1 250
624
1 987
Other non-current assets 1 808
2 289
62
73
56
127
Other distributed assets
791
905
133
22
224
300
Undistributed assets
-
-
-
-
-
-
Total assets 7 248 12 045
1 416
1 345
904
2 414
Distributed liabilities 1 586
2 436
75
16
173
370
Undistributed liabilities
-
-
-
-
-
-
Total liabilities 1 586
2 436
75
16
173
370
Other information
Investments
198
201
0
9
23
35
Depreciation/Amortization
469
420
10
14
37
52
Impairment 3 750
626
-
-
514
0
Total
2010
2009
2010
2009
-
-
-
-
-
-
-
-
-
-
2 237
1 557
596
571
365
2 756
1 861
781
752
431
-
-
5 326
6 581
21
19
-
-
21
19
5 326
6 581
-112
-3
605
1 807
-
-
138
881
-
-
358
1 030
6 494
1 926
1 286
881
12 088
2 489
1 585
1 030
1 019
1 388
10 587
17 192
241
8 512
453
13 917
2 075
8 512
3 275
13 917
8 753
14 370
10 587
17 192
0
1
-
5
3
0
221
517
4 264
250
489
626
1) The Parent Company’s operating revenues are included and relate to compensation for Group wide internal services which are valued at market value. Operating income includes other losses which during 2010 included capital loss on the sale of operations in Finland of SEK 626 M. Operating income for Directories
Scandinavia also includes a positive one off item of SEK 45 M relating to Eniro Upphandling Offentlig AB, which was divested 2010.
57
NOTE 2 BREAKDOWN OF OPERATIONAL COSTS
GROUP
SEK M
Compensation to employees
inc. social security
Paper, printing and distribution
Agents, consultants and other
non-employed personell
Advertising
Depreciations, amortizations
and impairments
Other
NOTE 3 EMPLOYEES
Average number of full time employees
PARENT COMPANY
2010
2009
2010
2009
2 259
378
2 448
552
76
-
70
-
264
229
254
239
45
2
55
6
4 781
1 078
1 115
1 408
1
24
0
26
Total operational
157
costs 8 989
6 016
148
Operational costs refer to: production costs, sales costs, marketing costs, administration costs
and production development costs.
Depreciation and amortization by function
GROUP
PARENT COMPANY
SEK M
2010
2009
2010
2009
Depreciation
tangible assets
Production costs
37
46
-
Sales costs
13
18
-
Marketing costs
1
1
-
11
13
0
0
5
2
-
Total tangible assets
67
80
0
0
Amortization
intangible assets
Production costs
59
60
-
Sales costs
7
14
-
Marketing costs
331
304
-
10
8
1
43
23
-
-
2010
Total
of whom
women %
2009
Total
of whom
women %
Sweden
Norway
Finland
Denmark
Poland
1 425
831
637
411
1 133
56
44
67
52
60
1 707
911
816
470
1 192
61
47
68
52
61
Total
4 437
56
5 096
59
The number of full-time employees at year-end amounted to 3 929 (4 994).
Average number of full-time employees in the Parent Company was 27 (28) of whom women 16
(15).The proportion of women on the Board of Directors was 30 (30) per cent at year end and
among Group Management 10 (22) per cent at year end.
Absence due to illness as a percentage of total
ordinary working time*) :
2010
2009
Parent company
2010
2009
Total absence
4,5%
4,8%
0,2%
1,1%
Percentage of total absence
longer than 60 days
35%
29%
-
88%
Absence men
3,2%
3,5%
0,2%
0,1%
Absence women
5,4%
5,6%
0,1%
2,0%
29 years and under,
)
-**)
(total men and women) 4,4%
5,4%
-** 30–49 år
4,1%
0,2%
0,2%
50 years and older
**)
5,1%
**)
*) Ordinary working time does not include leave of absence or parental leave. Part-time absence due to illness is included in the figures.
**) Figures omitted because the group is comprised of less than 10 individuals
Total intangible assets
450
409
1
Total depreciation and
amortization
517
489
1
0
Impairments relating to tangible assets amount to SEK 3 M (-) . Impairments relating to intangible assets amount to SEK 4 261 M (626)
58
Swedish group companies
NOTE 4 SALARIES AND OTHER COMPENSATION
2010 2009
Salaries Salaries
and other
Social
and other
compensation
costs compensation
Social
costs
Parent company
52
of which pension costs
Subsidiaries
1 715
28
46
11
491
1 926
169
24
10
452
171
Group total
1 767
519
1 972
180
476
181
Salaries and other compensation distributed by country and between Board of Directors,
President
and other employees
2010
Board of
of which variable
Directors and
Other
compensation SEK M
Presidents
employees to the presidents 2009
Board of of which variable
Directors and
Other compensation
Presidents
employees to the presidents
Parent Company
Sweden excluding Parent Company
Norway
Finland
Denmark
Poland
17
14
5
4
2
3
35
547
489
225
290
136
0
1
0
2
0
0
12
4
7
3
2
6
34
601
545
288
328
142
3
1
2
0
0
2
Group total
45
1722
3
34
1 938
8
NOT 5 COMPENSATION AND OTHER BENEFITS, BOARD OF DIRECTORS, PRESIDENT AND OTHER SENIOR EXECUTIVES Principles
Those members of the Board of Directors elected by the Annual General Meeting receive compensation in an amount determined by the Annual General Meeting. Compensation to employee
representatives is proposed by the Company and resolved upon by the General Meeting.
The guidelines below for compensation to senior executives were decided by the AGM in May
2010 and are in line with the guidelines adopted by the AGM in 2010.
The aim of the guidelines for compensation to senior executives is that Eniro should provide a
competitive fee such that these people can be recruited and maintained within the Eniro Group
Compensation to senior executives consists of several parts: (1) fixed salary, (2) variable salary, (3) a
long-term incentive program and (4) pension provisions and other remunerations and benefits.
1. Fixed salary
The fixed salary is based on the individual executive’s area of responsibility, expertise and experience. To, as far as is possible, create a transparent and fair remuneration system, Eniro employs
a so called grading system in which all positions in the senior management of the Company are
classified according to international standards. This also permits salary comparisons. The salary
of senior executives is locked for 2010, 2011 and 2012 (with the exception of change in position,
promotion etc.).
2. Variable salary
The overall objective of the variable salary is to contribute to achieving the group’s commercial
targets in the short and longer term and to create long term value for shareholders. Targets shall
be determined by the Board for our financial years beginning 1 January 2010. The targets shall
cover the group’s financial results (revenues, costs and EBITDA), results for relevant functions
(development of the Eniro culture, customer satisfaction index etc.) and personal targets for
the individual participant (targets that are fixed in the strategic plan). The variable salary shall
be made up of two equal parts - one part cash and one part synthetic shares. The parts shall
be of equal size and together be a maximum 70 or 80 per cent (for the President 100 per cent)
of the fixed salary. The synthetic shares shall be linked with Eniro’s share price and conversion
of the synthetic shares into cash shall occur after three years (not two years as previously). The
maximum amount to be paid out for our synthetic shares shall be limited to five times the share
price at the time of conversion to synthetic shares. The Board of Directors is authorized to adjustments necessary in order for the financial outcome of the program to reflect i.a. dividends and
changes in the share capital. Conversion of variable salary into synthetic shares shall be done in
2011 and any payment regarding such synthetic shares shall be made in 2014. The variable salary
shall be determined by the Board based on an annual evaluation of the individual executive’s
performance in relation to the targets. Payment of part of the variable salary shall be conditional
on the underlying targets having been achieved in a manner that is sustainable in the long term.
The company shall be authorized to demand repayment of variable salary if payment later proves
to have been based on information that was clearly incorrect.
3. Long term incentive program
At the Annual General Meeting on April 5, 2005, with an adjustment at the Annual General Meeting on April 5, 2006, it was decided to introduce a share saving program for employees in the
Eniro Group. This program also includes senior management within the Eniro Group. Employees
in the Eniro Group in Sweden, Norway and Finland and senior executives in Denmark and Poland
were invited to participate in a share-savings program through which they may save up to 7.5
percent of gross salary during 2005–2008 to purchase Eniro shares on the Nasdaq OMX Stockholm. Subject to the conditions that the share savings are held for a period of three years from
the purchase date, and that the employee remains employed in the Eniro group, each savings
share entitles the holder to 0.5 shares in Eniro (matching shares). In addition, senior executives
are entitled to 2 to 8 performance-based matching shares for each savings share, depending
on their position and the Group’s cash flow over the three-year period. No performance based
matching shares have been issued in 2009 or 2010 or will be during 2011, since it is planned to
terminate the program.
4. Pensions provisions and other remunerations and benefits
Eniro’s policy for pension is based on either an Individual Pension Plan ((ITP plan or equivalent
national plan) or a premium-based pension plan or a premium-based pension plan. In the premium-based plan the premium will constitute a maximum of 35 percent of the fixed salary.
The period of notice and severance pay for senior executives follow standard practice. The President and CEO Johan Lindgren shall observe six months’ advance notice and the Company shall
observe twelve months’ advance notice when terminating his contract. If the Company terminates his contract, he is entitled to an additional severance pay of 6 months. Between other
members of Group Management and the company, there is a mutual notice period of a maximum
of 12 months. Certain members of Group Management are entitled to additional severance pay
of 6 to 12 months.
Other remunerations and benefits consist primarily of health insurance and the benefit of a company car. The benefit of a company car is based on Eniro’s at every time applicable car policy.
59
SEK M
Compensation
Board of Directors
Board fee
committee work
Total
Lars Berg (ordförande)
Thomas Axén
Barbara Donoghue
Harald Strömme
Karin Forseke
Simon Waldman
Mattias Miksche
Bengt Sandin 1)
Lina Alm 1)
Jonas Svensson 1) Ola Leander 1)
1,0
0,42
0,42
0,42
0,42
0,42
0,42
0,02
0,02
0,02
0,00
0,15
-
0,15
0,08
0,08
-
-
-
-
-
-
1,15
0,42
0,57
0,50
0,50
0,42
0,42
0,02
0,02
0,02
0,02
SUMMA
3,59
0,45
4,04
1) Employee representative.
President and other senior executives
SEK M
Basic salary
including
Variable Other
Pension
Other
benefits 4)
costs
compensation 5) Total
vacation pay compensation 3)
1,5
0,75
0,0
0,5
-
2,8
President and CEO Johan Lindgren, Sep–Dec 1)
3,0
-0,8
0,0
1,1
10,6
13,9
President and CEO Jesper Kärrbrink, Jan–Aug 2)
19,0
3,0
0,5
4,8
8,3
35,6
Group management 14 people of whom 5 full year, 6)
Holdings
savings
shares
Holdings
synthetic
shares
-
-
19
14 324
87 110
Total 23,5
3,0
0,5
6,4
18,9
52,3
19
101 434
1) President Johan Lindgren had a yearly fixed basic salary of SEK 4.5 M in 2010 but only worked part of the year.
2) President Jesper Kärrbrink had a yearly fixed basic salary of SEK 4.5 M in 2010 but only worked part of the year. Vacation benefits are included in the basic salary above. He also receives severanced pay and pay during notice, which is s hown under other compensation in the table above.
3) Concerns variable compensation for the year and any possible adjustment for previous years’ compensation, including adjustments related to synthetic shares distributed 2008–2009.
4) Relates to the tax value of company cars.
5) Relates to severance pay, salary and pension cost during notice period of which about SEK 10 M will be paid in 2011 and 2012.
6) For 2009, basic salary including vacation benefits amounted to SEK 20.4 M, variable compensation SEK 5.8 M, other benefits SEK 0.9 M, pension cost SEK 4.7 M and other compensation SEK 15.8 M.
Variable compensation
Variable compensation to the President and CEO Johan Lindgren for 2010amounted to 0.75 SEK
M corresponding to 50 percent of basic salary. The 2010 outcome corresponds to 50% of maximum bonus for the President and CEO. Variable compensation to the President and CEO Jesper
Kärrbrink for 2010 amounted to SEK -0.8 (2.5) M corresponding to minus 28 percent of basic
salary. The cost for the variable compensation refers to the change in value of synthetic shares
in the years 2008–2009.
The reported value of synthetic shares allocated to Group Management including President and
CEO amounted at year end 2010 to SEK 3 (5) M.
Share savings program
On 31 December 2010 there were still 127 unmatched share savings (after reversed split 50:1
applied) within the program of which 19 were owned by people in Group Management.
The annual cost for the share saving program amounted to SEK 4 M (-2) of which SEK 0 M (0)
for the President and SEK 1 M (0) for the Group Management. The still unmatched savings in the
program since its start in 2005 is estimated to result in about 1 000 matching shares, of which
0 to the President and 146 to the Group Management. The reported value of matching shares
amounted at year end 2010 to SEK 0 (1) M.
60
Pensions
The pension costs for the CEO and President Johan Lindgren amounted to SEK 0.5 M corresponding to 35 percent of basic salary. The pension costs for the CEO and President Jesper Kärrbrink
amounted to SEK 1.0 M corresponding to 35 percent of basic salary. The Group Management’s
pension costs amounted to SEK 4,8 M (4.7), corresponding to 25 percent of the basic salary. The
President and CEO, Johan Lindgren, has a premium-based pension for which the fee amounts to
35 percent of basic salary. The members of the Group Management have defined-contribution
pensions with fees amounting to at most 35 percent of basic salary or are subject to the normal
ITP plan. All pension benefits are vested, meaning that they are not dependent on future employment. The Parent Company and the Swedish subsidiaries follow the ITP plan. Swedish pension
commitments are calculated by PRI, and credit insurance is obtained through FPG, an insurance
company that underwrites pension commitments. The Group’s employees in other countries are
normally covered by country-specific pension plans. Fees for these plans are usually a part of
the employee’s salary.
Related party transactions
Compensation to Group Management and other senior executives is presented above.
In other respects, no transactions with related parties occurred during the year.
NOTE 6 AUDITING FEES
SEK M
PricewaterhouseCoopers,
audit assignments PricewaterhouseCoopers,
other auditing activities PricewaterhouseCoopers,
tax consultancy PricewaterhouseCoopers,
other assignments
Total
auditing fees
NOTE 7 FINANCIAL REVENUES AND COSTS
GROUP
PARENT COMPANY
2010
2009
2010
2009
6
6
2
2
3
3
3
3
0
-
-
-
1
1
0
1
10
10
5
6
In other auditing activities, audits in connection with the new share issue are included.
SEK M
GROUP
2010
PARENT COMPANY
2009
2010
2009
Revenues
Exchange rate gains
on borrowing
8
13
-
0
Exchange rates gains on
Intra-Group receivables
and liabilities
115
37
11
Other financial revenues
2
3
-
External financial
interest income
18
66
2
2
Internal financial
interest income
-
-
5
9
Total
143
119
18
11
Cost
Exchange rate losses
on borrowing
4
12
-
Exchange rate gains
on Intra-Group receivables
and liabilities
80
69
10
14
Other financial costs
8
2
0
0
Interest cost for
pension liabilities
11
11
0
External financial
interest cost
443
470
1
0
Fair value result on
interest swaps:
cash flow hedges
transfer from equity
160
15
-
Internal financial
interest costs
-
-
183
278
Total
706
579
194
292
Total net financial items
-563
-460
-176
-281
The Parent Company income statement includes exchange rate differences that are intended as
hedges of equity in subsidiaries. Such differences are recognized directly in consolidated equity.
This amounted to a net of SEK -10 (-22) M.
External financial interest cost have increased during 2010 due to effects from outstanding interest rate swaps with SEK 311 M. For 2009 the corresponding effect has increased the external
financial interest cost by SEK 189 M.
61
NOTE 8 TAX
The following components are included in the tax costs:
GROUP
PARENT COMPANY
SEK M
2010
2009
2010
2009
Current tax cost on income for the year
Additional tax cost coresponding to interest on tax equilization reserve
Adjustments on current tax for prior years
Deferred tax cost relating to utilized loss carried forward
Deferred tax cost relating to not utilized loss carried forward
Deferred tax income related to temporary differences
Deferred tax income relating to loss carried forward
Adjustments on deferred tax for prior years
78
4
111
190
9
-476
-28
-7
167
5
-3
199
1
-348
-383
-14
-78
4
0
247
-
-
-
-
-260
5
-7
-307
-
Tax cost recognized -119
-376
173
-49
Current tax recognized directly in equity
-
-
-74
265
Total tax for year
-119
-376
99
216
In November 2010, Eniro received final notification from the Norwegian tax authorities that the tax cost for the period 2001-2005 for subsidiary Eniro Holding AS
(previously Findexa Norway AS), which was acquired by Eniro during 2005, increase by approximately SEK 105 M. The amount was paid in January 2011.
The liquidation of the German company Eniro Windhager GmbH was completed in June 2010. Eniro has been able to use the tax losses in Sweden during 2010 of
about SEK 730 M and the company expects not to pay tax in Sweden for a number of years to come.
In the parent company the tax effect of group contributions received was recognized directly in shareholder´s equity in an amount of SEK 74 M (effect from paid
group contributions was SEK 265 M).
The tax that is attributable to components in other total income is deemed to be at the following amount:
2010
2009
Before tax
Tax effect
After tax
Before tax
Tax effect
After tax
Change in non controlling interests
-824
-48
570
-
-3
-
13
-150
-
-
-824
-35
420
-
-3
900
626
-610
-2
-6
-
-162
160
0
-
900
464
-450
-2
-6
Total other total results for the period
-305
-137
-442
908
Current tax
-
Deferred tax
-137
-2
906
62
-
-2
Relationship between tax cost for the year and tax cost
in accordance with prevailing Swedish tax rate
SEK M
Reported income before tax
Tax at the domestic rate of 26.3% Tax effect of
- operating costs that are not deductible for tax purposes
- revenues that are not taxable
Previous years’ losses for which loss carry-forwards now are utilized
Previous years’ unutilized losses now deemed possible
to be utilized
Adjustments of prior year’s tax
Other
Differences between swedish and foreign tax rates
Changes in deferred tax
GROUP
2010
2009
-4 739
-1 246
232
61
1 118
-81
-3
18
-83
-161
-16
104
-4
-9
-220
-17
26
-119
-376
Tax cost recognized
SEK M
GROUP
2010
2009
Deferred tax assets
Loss carry-forward
Deductible temporary difference
Tangible assets
Goodwill and other intangible assets
Borrowing
Provisions for pensions
Other provisions and accrued costs
Prepaid revenues
Accounts receivable
Less deferred tax liabilities offset
331
400
44
8
19
13
24
25
8
9
-158
47
14
102
119
20
23
8
12
-464
Total defered tax assets
323
281
SEK M
Deferred income tax liabilities
Taxable temporary difference
Goodwill and other intangible assets
Derivative instruments Borrowing
Work in progress
Provisions for pensions
Other
Untaxed reserves
Less deferred tax assets offset
Total deferred income tax liabilities
GROUP
2010
2010
2009
Net deferred tax liability recognized on the opening date
354
Acquisition of activities
-
Charged to the income statement
-313 Charged to other comprehensive income
137
Translation difference
-148 Net deferred tax liability recognized on the closing date
30
871
2
-545
-149
175
2009
460
-
41
0
7
2
1
-158
654
86
40
6
5
4
304
-464
353
635
354
The majority of net deferred tax liabilities will mature after more than 12 months.
The group has no tax losses that are not balanced December 31, 2010.
NOTE 9 TANGIBLE ASSETS
SEK M
The following components are included in deferred
tax assets and liabilities
GROUP
Acquisition value on the
opening date Acquisitions
Investments during the year
Sales and disposals
Reclassifications
Translation difference for
the year
GROUP
Inventories
PARENT COMPANY
Inventories
2010
2009
2010
2009
526
-
44
-71
3
613
0
45
-61
-78
1
-
0
-
-
1
0
-
-64
7
-
-
Acquisition value on
the closing date 438
526
1
Accumulated depreciation
on the opening date -389
-421
-1
Depreciation for the year
-67
-74
0
Sales and disposals
63
59
-
Reclassifications
-1
-50
-
the year
55
-3
-
Accumulated depreciation
on the closing date -339
-389
-1
Accumulated impairment
on the opening date -13
-39
-
Impairment for the year
-3
0
-
Sales and disposals
0
0
-
Reclassifications
-
26
-
the year
1
0
-
Accumulated impairment
on the closing date -15
-39
-
Residual value on the
closing date
84
124
0
Compensation received from
disposal of tangible assets
1
1
-
1
-1
0
-
-1
-
-
0
-
63
NOTE 10 LEASE CONTRACTS
Contracted leasing fees for contracts that cannot be terminated
operational leasing contract
GROUP
SEK M
2010
2009
- due within one year
- due between one and five years
- due later than five years
127
288
20
155
315
55
The year’s operating expenses include fees for operational leasing contracts in an amount of SEK
139 M (204). Leasing contracts for premises include customary index clauses. In February 2006,
a contract was signed between Eniro Sverige AB and HP Sverige for the operation of servers,
networks, databases and IT applications. The contract also included support and maintenance of
office IT environments including a service desk. The contract period is from 2006 to 2012 with an
option for Eniro to extend the contract for one year. The cost is based on usage and amounted
to SEK 60 M annually at the end of 2010. The contract is an operational leasing contract and
contracted payments are included in the specification above.
NOTE 11 INTANGIBLE ASSETS
GROUP
Brands with
indefinite
Other
SEK M
Goodwill
period of use
brands
Customer relations
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Acquisition value on the opening date 13 082
Acquisitions
0
-
Internally developed assets
-
Sales and disposals -857
Reclassifications
-
Translation difference for the year -872
1 216
-
21
157
-52
-3
-116
888
8
56
149
-6
73
48
18 171
0
21
157
-909
-3
-1 284
16 593
57
56
149
-6
85
1 237
Acquisition value on the closing date 11 353 13 082
1 257
1 365
46
51
2 274
2 457
1 223
Accumulated amortization on
the opening date -
-
-
-
-19
-8 -1 023
-677
-754
Amortization for the year
-
-
-
-
-6
-5
-310
-267
-134
Sales and disposals
-
-
-
-
-
-
-
-
13
Reclassifications
-
-
-
-
-
-11
-
6
1
Translation difference for the year
-
-
-
-
-3
5
86
-85
90
1 216
16 153
18 171
-483
-143
-28
-50
-50
-1 796
-450
13
1
173
-1 168
-415
-28
-55
-130
-754
-2 059
-1 796
-29
-75
34
-26
4
-1 922
-4 261
141
0
284
-1 155
-626
34
-26
-149
-92
-5 758
-1 922
370
8 336
14 453
-
0
-
12 235
49
-
-
-
-
798
1 365
-
-
-
-
-
-108
1 233
-
-
-
-
-
132
51
-
0
-
-
-
-5
19
-
-
-
-
32
0
2 457
-
-
-
-
-
-183
2 218
-
-
-
-
-20
259
Other
intangible
assets
Accumulated amortization on
the closing date -
-
-
-
-28
-19
-1 247
-1 023
-784
Accumulated impairment on
-3
-
-466
-
-92
the opening date -994
-861
-367
-265
Impairment for the year -4 208
-25
-
-67
-
-3
-
-456
-53
Sales and disposals
131
-
-
-
-
-
-
-
10
Reclassifications
-
-
-
-
-
-
-
-
-
212
-108
27
-35
0
0
34
-10
11
Accumulated impairment on
the closing date -4 859
-994
-340
-367
-3
-3
-432
-466
-124
Residual value on the closing date 6 494 12 088
917
998
15
29
595
968
315
Compensation received from sales
of intangible assets
-
-
-
-
-
-
-
-
0
64
ENIRO ANNUAL REPORT2010
Total
Other intangible assets
PARENT COMPANY
SEK M
2010
2009
Acquisition value on the opening date
3
-
1
2
Acquisition value on the closing date Accumulated depreciation on the opening date Depreciation for the year
3
3
0
-1
0
-1
0
2
3
Accumulated depreciation on the closing date Residual value on the closing date
Goodwill and other intangible assets with indefinite useful life are initially valued to acquisition
value. Brands are considered to have indefinite useful life, since they are market-leading and
have high recognition. These brands are long established and used both online and offline. There
are currently no known legal, contractual or competitive factors limiting their useful life. The
brands comprise Gule Sider and Ditt Distrikt, which was added through the acquisition of Findexa
in 2005 and Krak, which was added through the acquisition of Krak Forlag A/S 2007. During 2010
goodwill and brands with indefinite period of use are reported by segment and by country according to below table. This is a change from 2009 when goodwill and brands with indefinite period
of use were reported as Online, Offline media and Voice. The change to segments is according to
the organisation change at the end of 2009.
Other brands, customer relations and other intangible assets are amortized over their useful life
The useful life of other brands is 5–10 years. Average remaining useful life for other brands is 3
years. The useful life of customer relations is based on retention rate and amounts to 5–10 years.
The average remaining useful life of customer relations is 2 years (3).
Change of segments and cash generating units between 2009 and 2010
In November 2008 a new organization was introduced with the business units Online, Offline
Media and Voice. They were responsible for the operating result and had ownership of the strategy work and product development. The Organizationen based on the business units Online,
Offline Media and Voice was reflected in the i segment reporting from från 1st of Januari 2009.
In the end of 2009, a new organization was introduced. It was based on cross border functional
responsibility for Sales, Product & Services, Operations and IT. This organization is valid for Directories Scandinavia (Sweden, Norway and Denmark) and is applied on operations earlier classified
as Online or Offline Media. The Voice business and operations in in Finland and Poland are managed separately and is not an integrated part of the functional organizationen. The Organization
basered on Directories Scandinavia, Voice Scandinavia , Finland and Polen is reflected in the
segment reporting from 1st of Januari 2010.
In 2009 goodwill and other intangible assets with indefinite period of use was as Online, Offline
Media and Voice. In 2010 goodwill and other intangible assets with indefinite period of use is
reported by segment by country which is a more detailed level than the group segments and
UNIT
WACC before tax
Sweden Directories
Sweden Voice
Norway Directories
Norway Voice
Denmark
Poland
Finland Voice
10,8%
10,8%
11,4%
11,4%
10,2%
13,5%
10,6%
is shown in the table below. The change is due to the new organization and the corresponding
change in internal controlling and external reporting. The allocation of goodwill and other intangible assets with indefinite period of use to each country have been possibe due to the original
acquisition analysis.
Impairment of goodwill and intangibles with indefinite period of use
The group does impairment of goodwill and brands with indefinite period of use for cash generating units that correspond with the segments that at each time are used for internal controlling
and external reporting. This level is the lowest specified level for which goodwill is monitored in
the internal controlling.
The assumptions that are used as base for impairment of the cash generating units are a result
of the group´s yearly long range strategic process. Key elements for the cash flow is the forecast
for the coming three years made by segment responsible and approved by Group management
and Board . The forecast is also checked against external market research. Forecasted cash flows
are based on expected revenue development for each segment considered market conditions and
cost base adjusted for cost saving initiatives. The level of investment varies beteen one and two
percent of the revenues for each segement. The development of working capital is estimated to
have an relatively minor impact on cash flow. Other key assumptions is cost of capital (WACC)
and growth from year four. From year four growth of 2 percent is assumed i.e. in line with expected inflation. During 2009 a growth between minus 1 and plus 3 percent was used. The cost of
capital before tax has been calculated for each cash generating unit and varies between 10,6 to
13,5percent. The increase is mainly due to higher risk-free interest rate and higher risk premium
combined with expected higher financing cost.
The impairment test showed declining future cash flows due to decreased demand for printed
products in Norway and Poland and an increased cost of capital. This resulted in an impairment
of goodwill in the Directories business with SEK 3 652 M in Norway and SEK 500 M in Poland. In
addition an impairment of SEK 56 M was made of Eniro Upphandling Offentlig AB.
Valuation resulted in the following assumptions with the outcome shown below:
Annual cash flow
growth years 0–3
Margin over
book value
Margin for 1% higher
WACC after tax
Margin for 10% lower
cash flow
-4%
-14%
1%
-5%
n.a.*)
5%
-1%
382%
36%
0%
46%
27%
0%
99%
318%
18%
-13%
28%
8%
-10%
72%
334%
22%
-10%
32%
14%
-10%
79%
*) Not applicable due to negative start value calculation
Negative development in cash flow growth year 0–3 is expected for Directories operations except Norway where migration to online has gone further than other units and therfore show positive growth. The margin refers to the difference between the value in use and and book value.
The risk-free interest rate that was used for calculating the discount factor varied between 3.2
per cent (Finland) and 6.2 per cent (Poland).
For 2009 the cost of capital before tax was 8,6 percent for Online, 10,9 percent for Offline Media
and 10 percent for Voice. 2009 yearly cash flow growth year 0–3 was 24 percent for Online, -19
percent for Offline Media and -7 percent for Voice.
65
Goodwill and other intangible assets with indefinite useful life are reported for the following cashgenerating units and at December 31, the residual value consisted of the following items:
SEK M
SEK M
GROUP
2010
2009
Goodwill
Sweden Directories
1 070
1 127
Norway Directories
2 963
7 008
Denmark Directories
616
716
4 649
8851
Sweden Voice
855
855
Norway Voice
366
395
Voice Scandinavia
1 221
1 250
Poland
320
874
Finland
304
1 113
Total
6 494
12 088
Brands
Norway Directories
783
846
Denmark Directories
112
129
895
975
Norway Voice
22
23
Voice Scandinavia
22
23
Total
917
998
Total intangible assets with
indefinite useful life
7 411
13 086
Goodwill included in recognized residual value for
which amortization is deductible for tax purposes
2010
2009
Sweden
Denmark
Finland
2
184
226
6
218
998
Total
412
1 222
NOTE 12 ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
PARENT COMPANY
2010
2009
2010
2009
Provisions on the opening date New provisions
Provisions utilized during
the year
Reversed provisions, not utilized
Reclassifications and
sold operations
Effects of exchange rate changes
210
115
178
120
-
-
-
-123
-8
-78
-20
-
-
-
-
-19
10
0
-
-
-
Provisions on the closing date 175
210
-
-
Customer losses recognized in the income statement as sales costs amounted to SEK 103 M (109).
Accounts receivable net
SEK M
GROUP
PARENT COMPANY
2010
2009
2010
2009
- not due
- due less than one month
- due 1–3 months
- due more than 3 months
524
214
62
42
538
287
84
119
-
-
-
-
-
Total 842
1 028
-
-
SEK M
GROUP
PARENT COMPANY
2010
2009
2010
2009
- not due
- due less than one month
- due 1–3 months
101
-
-
14
73
0
-
0
61
-
-
-
1
-
Total 115
73
61
1
PARENT COMPANY
SEK M
2010
2009
2010
2009
Accounts receivable gross
Provisions for customer losses
1 017
-175
1 238
-210
-
-
-
842
1 028
-
-
Accounts receivable net
GROUP
GROUP
SEK M
GROUP
Provisions for customer losses
Accounts receivable with an identified impairment are equal to provisions for customers losses.
SEK M
GROUP
PARENT COMPANY
2010
2009
2010
2009
- not due
7
0
22
-
1
-
0
-
Total 7
22
1
0
The maximum exposure to credit risk at the reporting date is the fair value of each category of
receivable mentioned above. The group does not hold any collateral as security.
66
NOTE 13 PREPAID COSTS AND ACCRUED REVENUES
SEK M
GROUP GROUP
SEK M
PARENT COMPANY
2010
2009
2010
2009
Prepaid interest costs
Other prepaid costs
Accrued revenues
Accrued interest income
-
103
103
-
0
87
151
1
-
14
3
0
0
9
-
Total 206
239
17
9
2010
PARENT COMPANY
2009
2010
2009
Granted, unutilized
credit facilities due within one year
-
-
-
due between one and
five years
300
2 300
-
due later than five years
-
-
-
Total granted credit facilities
300
2 300
-
Fair value of long
term borrowing
3 842
7 055
-
-
NOTE 14 CASH AND CASH EQUIVALENTS
The fair value of short-term borrowing is roughly equal to the carrying amount, since the loans
have variable interest rates that are hedged through interest swaps.
Cash and cash equivalents consist primarily of bank balances and smaller current investments in
foreign units that are not included in the Group’s central chart of accounts. Current investments
are classed as financial assets valued at fair value in the income statement.
The effective interest rates on the
closing date were as follows
SEK M
GROUP
PARENT COMPANY
2010
2009
2010
2009
Current investments
Cash and bank
0
450
0
350
-
1 010
185
Total cash and cash
equivalents
450
350
1 010
185
GROUP
PARENT COMPANY
2010
2009
2010
2009
Non-current bank loans
Current bank loans
Other current interestbearing liabilities
3 842
368
7 055
100
-
171
-
3
0
-
-
Total borrowing
4 213
7 155
171
-
PARENT COMPANY
2010
2009
2010
2009
2,03%
3,63%
2,23%
2,98%
1,36%
2,83%
2,22%
1,14%
-
-
-
-
-
EUR
NOK
DKK
SEK
The Group’s exposure with respect to borrowing for changes in interest rates and contracted
dates for rate negotiations (excluding the effect of interest swaps) is shown below
SEK M
As at 31.12.10
NOTE 15 BORROWING
SEK M
GROUP
SEK M
Total
borrowing
SEK M
As at 31.12.09
Total
borrowing
6 months
or less
6–12
months
12–36
months
36 months
or longer
Total
4 213
-
-
-
4 213
6 months
or less
6–12
months
12–36
months
36 months
or longer
Total
7 155
-
-
-
7 155
The interest-bearing loans have the following maturity structure:
GROUP
PARENT COMPANY
SEK M
2010
2009
2010
2009
during the coming year
during the following five years
4 213
-
100
7 055
171
-
-
Total
4 213
7 155
171
-
Recognized amounts by
currency for borrowing
EUR
720
838
-
NOK
2 279
5 345
-
DKK
483 557
-
SEK
728
415
171
-
Of the total borrowing at the end of 2010, SEK 4 210 M, an amount corresponding to SEK 1 915 M
is hedged to maturity (21 August 2012). The interest hedge is performed with interest swaps (see
Note 16 Derivative instruments). The portion of borrowing that was not interest-hedged (SEK 2
295 M at year-end 2010) is affected by interest-rate fluctuations. An interest-rate change of 1
per cent affects interest expenses by SEK +/– 23 M per year.
Financing
The previous loan agreement
In November 2007, Eniro entered into a five year loan agreement of SEK 13 billion with a bank
consortium consisting of Danske Bank A/S, Denmark, Swedish branch, DnB NOR Bank ASA, Norway, Swedish branch, Svenska Handelsbanken AB (publ), Nordea Bank AB (publ), The Royal Bank
of Scotland plc, Skandinaviska Enskilda Banken AB (publ) and Swedbank AB (publ). The agreement replaced Eniro’s previous credit facility and was intended to finance ongoing operations, as
well as allow a transfer of capital to the shareholders, which took place in December 2007. The
loan consisted originally of five so-called tranches: tranche A amounted to NOK 5 billion; tranche
B amounted to EUR 80 million; tranche C amounted to SEK 2 450 million; tranche D amounted to
DKK 400 million and tranche E amounted to SEK 1 billion. In addition to the credit facilities A to E,
Eniro initially had a multi-currency credit facility that originally amounted to SEK 2 500 million.
Following extra amortization during 2009, there is no longer a fixed amortization amount. Borrowing costs are recognized in the income statement as an interest expense from the date of
the loan agreement on 21 August 2007 until the due date on 21 August 2012. Since the company
has established a new loan agreement, the entire remaining borrowing costs for the previous
loan agreement have been recognized in the income statement as an interest expense at the
end of December 2010. At the end of 2010 balanced borrowing cost amount to SEK - M (74) in
total bankloans.
67
The new loan agreement
On November 30, 2010, Eniro entered into a new credit facilities agreement with the same bank
consortium as under the previous credit facilities agreement. The lenders’ obligation to provide
loans under the new credit facilities agreement is, inter alia, conditional on the Rights Offering
being completed no later than January 15, 2011 and that the net proceeds in full will be used for
repayment of existing loans. The new agreement came into effect on 13 January 2011.
The new credit facilities agreement is divided in five tranches: Tranche A of SEK 2,088 million;
Tranche B of approximately NOK 1,216 million; Tranche C of approximately DKK 80.9 million;
Tranche D of SEK 1,000 million (multicurrency); and Tranche E of approximately SEK 197 million.
In addition to the term loan facility, there is a multicurrency credit limit in an aggregate amount
of SEK 300 million. The termination date for Tranche A, Tranche B, Tranche C and Tranche D and
the revolving facility is the date falling four years from the date of conclusion of the new credit
facilities agreement. The termination date for Tranche E is August 12, 2012.
Covenants
The new loan agreement contains the normal restrictions and conditions on financial covenants,
such as:
a) a requirement on the ratio of consolidated cash flow to consolidated debt service;
b) a requirement on the ratio of consolidated EBITDA to consolidated net interest;
c) a requirement on the ratio of consolidated total net debt to consolidated EBITDA;
d) a requirement that investments do not exceed certain amounts for certain periods.
as well as conditions and limitations regarding further debts, guarantees and security, significant
change of business, acquisitions and disposals.
The financial covenants listed under a)–c) above will be measured quarterly on a continuing
basis of twelve months.
The purpose of Tranche A, Tranche B, Tranche C and Tranche D is to be applied towards refinancing of outstanding debt under the existing facilities agreement, payment of transaction costs
related to the Rights Offering and the new financing arrangement. Tranche B may also be applied
towards discharge of the potential tax liability in Norway. Tranche E may be applied towards
payment of termination costs under the hedging arrangements regarding the existing credit
facilities agreement or payment of any debt incurred for the purposes of discharging such costs.
The purpose of the revolving facility is to be used for general corporate and working capital
purposes of the Group.
Termination/grounds for termination
The Company is free to terminate the borrowing agreement. In other respects, the agreement
contains the normal grounds for termination (falling under “events of default”).
Tranche A, Tranche B and Tranche C will be repaid as follows, SEK 200 million in 2011, SEK 300
million in 2012 and SEK 400 million in 2013, in each case on a semi-annually basis, and SEK
250 million in June 2014 and the remaining amount on the termination date for those tranches.
Tranche D and Tranche E shall be repaid on their respective termination date. Eniro may cancel or
prepay the facilities in advance (in whole or in part) if Eniro so desires.
SEK M
The new credit facilities agreement contains provisions regarding mandatory prepayments in
respect of, inter alia, disposal proceeds, insurance proceeds, capital markets and mezzanine proceeds The new credit facilities agreement also contains a mandatory prepayment upon a delisting of Eniro’s shares or a change of control in Eniro with the effect that more than 30 percent
of the votes in Eniro is acquired by any person (other than any underwriters of the rights issue)
alone or together with any other person(s) who are members of the same group or affiliated or
acting in concert with that person. Further, 75 percent of amounts of excess cash flow shall be
applied in mandatory prepayment until the ratio of consolidated total net debt to consolidated
EBITDA at group level is below 3:1
Interest levels
The new loan agreement carries a margin over IBOR and follows an interest ladder based on
the company’s debt level (defined as consolidated net debt in relation to EBITDA). Three months
IBOR was January 13 2011 2,005 percent in Sweden, 2,58 percent in Norway and 1,21 percent in
Denmark. The margin above IBOR is as shown below:
%
Above 4,00
Up to and including 4.00 but above 3.00
Up to and including 3.00 but above 2.00
Less than 2.00
5,50%
4,50%
3,75%
3,00%
Interest hedging
The loan is subject to the condition that the company will hedge 40 percent of the interest
payments until the due date for the outstanding loan amount. The hedging requirement ceases
on 21 August 2012.
Guarantees and collateral
Shares in all Group companies directly owned by Eniro, all material group companies (i.e. each
Group company which has EBITDA representing 5 percent or more of the consolidated EBITDA,
has gross assets or turnover representing 5 percent or more of the gross assets or turnover of
the Group) and all Group companies that are the owners of or hold the rights to search engines,
data bases or any other rights or assets that are material to the operations of the Group shall
be provided as security for the new credit facilities agreement. Furthermore, security shall
be provided over all material trademarks and other IP-rights, material intra-Group loans and all
other material assets.
NOTE 16 DERIVATIVE INSTRUMENTS
Assets
2010
Liabilities
Assets
2009
Liabilities
-
73
-
24
-
-
327
366
Total
-
73
Less long-term portion
-
73
327
390
327
390
Interest swaps cash-flow hedges
Interest and currency swaps cash-flow hedges
Total long-term
derivative instruments
-
73
327
390
Short-term portion -
-
-
-
Interest swaps
The swap contracts entered entail a swap of floating interest rates for fixed rates. Per 31 December 2010, the nominal amount for interest swaps was SEK 360 M with a fixed interest of
4.55% and NOK 1 350 M with a fixed interest of 5.48%, while the variable rate is based on three
month IBOR.
Interest and currency rate swaps
Eniro has currency risk in net investments in NOK. The loan has a variable rate, which is hedged
with an interest swap that converts three month NIBOR to a fixed rate. In November 2008, with
the intention n of reducing the exchange rate effect on interest-bearing net liability, Eniro decided to enter into a SEK/NOK currency rate swap agreement with a nominal amount of NOK 4 250
M. The combination of interest and currency rate swap ion NOK is used to convert the variable
NOK rate (three month NIBOR) to a fixed SEK rate. The fixed rate is 5.36%, while the variable rate
is based on three month NIBOR. The SEK/NOK relationship was 1.1495. During 2009 the nominal
amount was reduced from NOK 4 250 M to NOK 3 500 M: At the time of the new share issue and
amortization of underlying NOK loan in December 2010, the company decided to terminate the
combined currency rate swap and the whole loss was recognized in December 2010.
Currency rate swaps
Currency rate swap contracts are sometimes used to hedge the need for short term loans alternatively surplus liquidity in the Group. No outstanding currency rate swaps were found at 31
December 2010 or 31 December 2009.
The borrowing agreement is guaranteed by the following major companies as Eniro AB (publ),
Eniro Sverige AB, Eniro 118 118 AB, Eniro Treasury AB, Eniro Norway AB, Eniro Holding AB, Sentrali Oy, Eniro Polska Sp. Z o.o., Eniro Danmark A/S, Findexa Luxemburg Sarl, Eniro Holding AS,
Eniro Norge AS and 1880 Nummeropplysning AS. See also Note 20 Committee and contingent
liabilities.
68
GROUP
NOTE 17 RETIREMENT BENEFIT OBLIGATIONS
Eniro has defined benefit-plans in Sweden, Norway and Finland. Some plans are funded with
special assets or funds held separately from the Group for future payments. Other plans are
unfunded and payments from those are paid by the Group as and when they fall due. Pension liabilities primarily relate to employees in Sweden, of whom nearly all are covered by defined benefit
pension plans. Eniro 118 118 has made provisions to a pension fund, while other commitments
are guaranteed through insurance with PRI Pensionsgaranti. Retirement benefit obligations are
calculated annually on the opening date, applying actuarial principles according to the Projected
Unit Credit Method.
The amounts reported in the consolidated balance sheet were calculated as follows:
GROUP
PARENT COMPANY
SEK M
2010
2009
2008
2007
2006
2010
2009
Current value of funded commitments
Fair value of plan assets
Total
Current value of unfunded commitments
Unreported actuarial losses
Net debt in balance sheet reported as
retirement-benefit obligations 650
-535
640
-524
646
-443
555
-386
527
-389
115
116
203
169
138
323
-226
291
-207
290
-295
250
-162
208
-118
43
-
23
-
212
200
198
257
228
43
23
Pension provisions include provisions in Eniro 118 118 for early retirement pensions in accordance
with collective agreements for negotiated pension entitlements (ERB Plan) from the ages of 55,
60 and 63 for certain personnel categories. The ERB plan is a pension plan that covers certain
employees at Eniro who were previously at Televerket (now TeliaSonera) prior to incorporation
in 1991. According to the agreement, compensation will be partially paid by the former owner
TeliaSonera. On 31 December 2010, the corresponding claim amounted to SEK 39 M (44). The
credit risk for the claim can be considered negligible.
The year’s unrealized actuarial losses were distributed as follows:
SEK M
2010
2009
2008
2007
2006
Effects of experience-based
adjustments
ITP plan
-2
-23
-6
Plan assets
8
10
-28
ERB plan
-4
7
-2
-32
-15
6
-15
3
-1
-41
-13
-4
-
1
-62
-8
-3
-70
-44
-83
Total effects of experiencebased
adjustments
2
-6
-36
Effects of changed assumptions
ITP plan
-21
93
-95
Plan assets
-
-
-
ERB plan
0
1
-2
Total effects of changed
assumptions
-21
94
-97
Total unreported actuarial losses
-19
88
-133
69
Changes in the defined-benefit obligations during the
year are as follows:
SEK M
GROUP
Total pension costs
PARENT COMPANY
2010
2009
2010
2009
At the beginning of the year
Current service cost Interest costs
Actuarial losses (+)/gains (-)
Benefits paid
Curtailments/Settlements
Termination benefits
Other
the year
931
22
36
26
-34
-10
11
11
940
20
33
-63
-33
-11
15
7
20
5
0
-
0
-
-
18
16
1
0
3
-20
23
-
-
At the end of the year
973
931
43
20
GROUP
SEK M
PARENT COMPANY
2010
2009
2010
2009
34
24
2
1
126
140
7
7
20
11
17
11
2
0
2
0
191
192
11
10
Costs for defined benefit plans
Costs for defined contribution
plans
Costs for special payroll tax
and tax on returns
Financial costs (Note 7)
Costs reported in income
statement
Costs reported in the following items in the income statement
The Parent Company’s pension obligations consist of the capital value of pension obligations
according to recommendation 4 of the Swedish Accounting Regulations (FAR).
Changes in the fair value of plan assets during the year
are as follows:
SEK M
2010
2009
At the beginning of the year
Expected return on plan assets
Actuarial gains (+)/losses (-)
Contributions from employer
Contributions from employees
Benefits paid
524
25
0
-
1
-3
-12
443
22
16
30
-1
14
At the end of the year
535
524
Sweden: The actual return on plan assets in the Swedish pension fund amounted to SEK 27 M
(33) corresponding to 7.1 per cent (10.4). The share portion can vary from 0 to 40 percent and
the expected return on total assets is 4.8 percent (4.9). On 31 December 2010, the fund portfolio
consisted of 46 (52) per cent Swedish fixed-income securities, 24 (20) per cent Swedish shares, 8
(7) per cent global shares, 19 (19) per cent alternative investments (funds) and 3 (2) per cent cash
and cash equivalents. For the fixed-income portfolio, the average maturity period was 2.47 (2.34)
years, and the average coupon interest was 4.44 (4.5) per cent.
Norway: The actual return on plan assets was 0 percent (5). On the 31 December 2010, the fund
portfolio consisted of 41 (65) percent Norweigan fixed-income bonds, 18 (12) percent shares, 33
(16) percent alternative placement investments (funds and property) and 8 (7) percent cash and
cash equivalents.
Specification of costs for defined benefit pension plans
SEK M
Current service cost
Interest cost
Expected return on plan assets
Actuarial net gains/losses
reported during the year
Curtailments/Settlements
Other
Total costs for defined
benefit pension plans
70
GROUP
PARENT COMPANY
2010
2009
2010
2009
38
36
-25
20
33
-22
2
0
-
1
0
-
7
-10
6
11
-9
8
-
-
-
-
-
52
41
2
1
GROUP
SEK M
2010
Production costs
Sales costs
Marketing costs
Financial costs (Note 7)
60
70
3
34
13
11
Costs reported in income
statement
191
PARENT COMPANY
2009
2010
2009
58
82
1
3
27
10
10
11
11
0
0
192
11
10
Important actuarial assumptions
SEK M
2010
Sweden Norway
Discount factor, %
Salary increases, %
Inflation, %
Increase in income based amount, %
Expected return
pension fund, %
2009
Finland
Sweden Norway
Finland
3,8
3,0
2,0
3,0
4,0
4,0
1,3
3,8
4,8
3,0
2,0
-
4,0
3,0
2,0
3,0
4,5
4,5
1,4
4,3
5,0
4,0
2,0
-
4,8
5,4
4,5
4,9
5,7
4,5
Internal data were used for attrition rates, while remaining employment time was calculated
individually by the PRI pension service and mortality was estimated according the Swedish Financial Supervisory Authority’s guidelines. A 65-year old man is expected to live until the age
of 86, while a 65-year old woman is expected to live until 88. In Norway, corresponding figures
are a 67-year old is expected to live until the age of 84 and a 67-year old woman is expected to
live until the age of 86.
Eniro’s and the Swedish subsidiaries’ pension commitments pursuant to the ITP plan are
calculated by PRI and are accounted for as a liability in the balance sheet. As of end December
2010, the pension provision was, according to local accounting rules (Swe GAAP) approximately
SEK 526 million, of which parts are funded through plan assets. The plan’s assets amounted to
approximately SEK 375 million at the end of the period. A credit insurance relating to the pension commitments has been taken out with the insurance company PRI. Each year, PRI makes a
credit assessment to establish the terms and conditions for renewal of the credit insurance. On
November 24, 2010 the Board of PRI made a decision regarding the terms and conditions for the
coming renewal of the credit insurance. The decision of the Board of PRI is that PRI in order to
renew the credit insurance requires that Eniro and the Swedish subsidiaries during 2011 reduce
its debt out pension liabilities by taking out insurance in Alecta corresponding to a debt of approximately SEK 60 million. This will lead to an increased cost, mainly due to that actuarial losses
in accordance with IFRS are expected to be realized. Eniro estimates that the cost increase for
2011 will amount to approximately SEK 40 million. The total increase in cash outflow for 2011 is
estimated to approximately SEK 75 million.
NOTE 20 COMMITMENTS AND CONTINGENT LIABILITIES
NOTE 18 OTHER PROVISIONS
Long-term provisions
SEK M
Provisions on the opening date Reclassifications from other
balance sheet items
New provisions
Provisions utilized
during the year
Reversed provisions,
not utilized
Effects of exchange rate
changes & other
GROUP
SEK M
PARENT COMPANY
2010
2009
2010
2009
6
11
-
-
8
28
-
6
7
20
-
-8
-11
-4
-
0
-
-
-
0
0
-
-
Provisions on the closing date 34
6
23
GROUP
2010
PARENT COMPANY
2009
2010
2009
Contingent liability
Contingent liability relating
to subsidiaries
-
-
35
50
PRI pensionsgaranti
-
-
-
Sureties for loans
-
-
4 210
7 219
Total contingent liability
-
-
4 245
7 269
Pledged assets
Pledged shares in subsidiaries
9 130
6 967
8 905
Total pledged assets
9 130
6 967
8 905
Total
9 130
6 967
13 150
7 269
Internal receivables and shares in subsidiaries have been pledged as collateral for Eniro Treasury’s
external loans. Alternatively, subsidiaries and the Parent company have also provided sureties for
Eniro Treasury’s liabilities. See also note 15 Borrowing.
Short-term provisions
SEK M
Provisions on the opening date Reclassifications from
long-term provisions
New provisions
Provisions utilized
during the year
Reversed provisions,
not utilized
Effects of exchange
rate changes
Provisions on the closing date GROUP
PARENT COMPANY
2010
2009
2010
2009
93
66
10
15
-7
66
65
-7
25
9
-79
-21
-13
-9
-7
-17
-
-5
-2
-
-
-
64
93
15
10
Provisions on 31 December 2010 related to provisions for restructuring.
NOTE 19 ACCRUED COSTS AND PREPAID REVENUES
GROUP
PARENT COMPANY
SEK M
2010
2009
2010
2009
Accrued personnel related cost
Accrued interest costs
Other accrued costs
Prepaid revenues 272
2
184
1 083
338
3
197
1 190
11
3
53
-
9
8
-
Total
1 541
1 728
67
17
71
NOTE 21 SHARES AND PARTICIPATION
Shares
and participation owned directly or indirectly by the Parent Company
NAME
Corporate registration number
Registered office
Number of shares
Capital share %
TIM Varumärke AB
556580-8515
Eniro Danmark A/S
18 93 69 84 Kraks Forlag A/S
10629241
Respons Group AB
556639-2196
Respons Holding AB
556570-6115
Eniro International AB
556429-6670
Budapest Projekt 92 KFT
01-09-362834
Eniro Sverige AB
556445-1846
Eniro Gula Sidorna AB
556445-6894
Eniro Gula Sidorna Försäljning AB
556580-1965
Eniro 118 118 AB
556476-5294
Eniro Passagen AB
556750-0896
Spray Passagen Internet KB
556751-3279
Eniro Initiatives AB 556763-0966
Starcus AB
556535-8008
Din Del AB
556053-2409
Din Del Försäljning AB
556572-1502
Kataloger i Norr AB
556670-3707
Guiden i Västerbotten AB
556714-3440
Alltommotor Bilweb Eniro AB
556723-6541
Din Del Lager 2 AB
556611-7494
Proff AB
556764-1534
Leta Information Eniro AB
556591-3596
Eniro Upphandling Offentlig AB (sålt 2010)
556665-6590
Eniro Treasury AB
556688-5637
Eniro Windhager AB
556751-0028
Eniro Holding AB
556688-5645
Findexa Luxembourg Sarl
B-100.546
Eniro Norway AB
556688-5652
Eniro Holding AS
986656022
Eniro Norge AS
963815751
1880 Nummeropplysning AS
976491351
Kartforlaget AS
984604513
Findexa Förlag AB
556750-9673
Grenseguiden AS
988437549
Kvalex AS
980253341
1880 Gule Sider AS
986493492
Telefonkatalog AS
988437565
1880 Telefonkatalogen AS
988437506
Telefonkatalogen 1880 AS
988437476
Rosa Sider AS
988437581
Hvite Sider AS
988437417
Din Bydel AS
888437452
Findexa Forlag AS
987529547
Din Pris As
985822883
Gule Sider AS
968306782
Telefonkatalogens Gule Sider AS
968306405
Bedriftskatalogen AS
979763379
Lokalveiviseren Informasjonsforlaget AS 979915314
Gule Sider Internett AS
980287432
Proff AS
989531174
Telefonkatalogen AS
982175968
Ditt Distrikt AS
883878752
Scandinavia Online AB
556551-9989
Oy Eniro Finland Ab
0100130-4
Eniro Sentraali Oy 1718301-8
Eniro Polska Sp.z.o.o
RH B 31000
Stockholm
1 000
Köpenhamn
24 000
Köpenhamn
11 000
Stockholm
1 000
Stockholm
1 050 915
Stockholm
1 000
Budapest
Stockholm
500 000
Stockholm
100
Stockholm
1 000
Stockholm
75 000
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Stockholm
200 000
Stockholm
1 000
Skellefteå
1 000
Skellefteå
100
Stockholm
100 000
Stockholm
100
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Stockholm
1 000
Luxembourg
343 848
Stockholm
1 000
Oslo
1 100 000
Oslo
55 206
Kristiansand
1 020
Oslo
100
Uddevalla
1 000
Oslo
100
Oslo
100
Oslo
100 000
Oslo
100
Kristiansand
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Oslo
100
Stockholm
100 000
Esboo
60 000
Kajaani
1 690
Warszawa
1 035 209
Book value on
31 December 2010 SEK M
Book value on
31 December 2009
SEK M
100
0
100
939
100
100
752
100
100
23
100
100
1 494
100
100
100
100
50
100
18
100
100
48
100
100
100
100
100
100
100
48
100
-
100
4 756
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
0
100
482
100
100
345
0
939
752
23
1 494
46
48
69
6 887
0
482
1 045
Total
8 905
The following companies were merged or liquidated in 2010
Parent Company
Shares in subsidiaries on 31 December 2009
Capital contribution Eniro Upphandling Offentlig AB
Capital contribution Din Del AB
Capital contribution Eniro Initiatives AB
Impairment of shares in Din Del AB
Impairment of shares in Eniro Upphandling Offentlig AB
Impairment of shares in Eniro Treasury AB
Impairment of shares in Eniro Polska Sp.z.o.o
11 785
3
48
18
-46
-72
-2 131
-700
Shares in subsidiaries on 31 December 2010
8 905
Company/operation
Changes during the year
Registered office
33.25.94.60
33.25.87.44
HRB 77757
Amsterdam
Amsterdam
Hamburg
TeleMedia International BV
TIMI Nederlands BV
Eniro Windhager GmbH
The following companies and operations were sold during 2010
Company/operation
Eniro Upphandling Offentlig AB
Suomi24 Oy
72
556665-6590
2154432-2
Registered office
Stockholm
Esboo
11 785
NOTE 22 SHARES AND PARTICIPATION IN ASSOCIATED COMPANIES
Shares and participation in associated companies on 31 December 2010
Company/operation
Corp. reg. No.
Registered office
Number of shares
Capital share %
Date of aquisition
Netclips AB Spray Passagen Internet KB
556688-6080
969733-6957
Danderyd
Stockholm
650
1 000
48,1
50
2007-02-20
2008-01-19
Shares in associated companies
SEK M
GROUP
PARENT COMPANY
2010
2009
2010
2009
4
5
0
1
37
0
-33
0
10
0
-
0
10
-
closing date
10
4
10
10
opening date
Increase due to divestment
Share of result
Dividend
Shares in Allt om motor AB and Snabbfilm Sverige AB were disposed of during 2010.
Since 2007, Netclips AB has formed part of the video community bubblare.se as an associated
company in Eniro.
At the end of the year, on 31 december 2010, the current assets were SEK 1 (3) M, current liabilities SEK 1 (2) M and equity SEK 0 (1) M for all associates.
The following companies and operations were sold or liquidated
during 2010
Company/operation
Corp. reg. No.
Registered office
Snabbfilm Sverige AB
Allt om Motor AB
556781-2341
556750-4740
Stockholm
Stockholm
73
NOTE 23 SHARES AND PARTICIPATION IN JOINT VENTURES
Shares and participation in joint ventures on 31 December 2010
Company/operation
Scandinavia Online AS
Start Networks AS
Corp. reg. No.
Registered office
Number of shares
Capital share %
988 875 740
981 910 273
Oslo
Oslo
1 093 739
3 094 894
50,1
25
Scandinavian Online AS is a jointly owned company with Norsk Aller AS, Aller AS, where Eniro
owns 50.1 percent of the company and Aller owns a total of 49.9 percent. SOL is an internet portal
in Norway. Scandinavian Online AS has as of 14 May 2008 a joint company with DB Medialab AS
where Scandinavian Online owns 50% which means that Eniro owns 25% of the company. Start
Network is a portal that has positioned itself as an entertainment arena primarily for younger
users. Eniro consolidates joint ventures in accordance with the proportional method. Accordingly,
Eniro’s share of the joint venture’s income statement and balance sheet are included under the
corresponding items in Eniro’s accounts.
Income from joint ventures, SEK M
2010
2009
Operating revenues
Operating costs
30
-28
28
-28
Net income
Assets and liabilities from joint ventures, SEK M
2
0
2010
2009
Non-current assets
Current assets
29
26
30
57
Total assets
55
87
Current liabilities
-
6
5
Total liabilities
6
5
Net assets
49
82
As of 31 December 2010, SEK 23 (25) M from joint ventures is included in Group goodwill.
74
NOTE 24 FINANCIAL INSTRUMENTS BY CATEGORY
Assets
valued at
Derivatives
Loans and
fair value in the
used for
Available for
Group , SEK M
receivables
income statement
hedging
sale
31 December 2009
Assets as per balance sheet
-
-
327
-
Other non-current receivables
-
-
-
-
Accounts receivable and other receivables
1 123
-
-
-
350
-
-
-
Total
1 473
-
327
-
Liabilities
valued at
Derivatives
fair value in the
used for
Other finacial
Group , SEK M
income statement
hedging
liabilities
Liabilities as per balance sheet
Borrowing
-
-
7 155
-
390
-
Accounts payable
-
-
305
Total
-
390
7 460
Assets
valued at Derivatives
Loans and
fair value in the
used for
Available for
Group, SEK M
receivables
income statement
hedging
sale
31 December 2010
Assets as per balance sheet
-
-
-
-
Other non-current receivables
-
-
-
-
Accounts receivable and other receivables
964
-
-
-
450
-
-
-
Total
1 414
-
-
-
Total
327
1 123
350
1 800
Total
7 155
390
305
7 850
Total
964
450
1 414
Liabilities
valued at
Derivatives
fair value in the
used for
Other financial
Group, SEK M
income statement
hedging
liabilities
Liabilities as per balance sheet
Borrowing
-
-
-
4 213
-
-
73
-
Accounts payable -
-
-
173
4 213
73
173
Total
4 459
-
-
73
4 386
Total
Fair value for all instruments valued in the balance sheet are attributable to level 2 in IFRS7, i.e. the value has been based on official market quotations.
75
NOTE 25 ACQUIRED OPERATIONS
SHARE CAPITAL
Parent company
There were no acquisitions during 2010. In March, Oreo AB was acquired (name changed to Eniro
Upphandling Offentlig AB) which operates in the public procurement market.
As of 31 December 2010, the quotient value of the Eniro share was 25 SEK after the reverse
split.
Proposed dividend is 0 (0) SEK per share, or a total of SEK 0 (0) M.
The acquisition analysis below presents a valuation of the acquired
net assets and goodwill.
GROUP
All aquistions All aquistions
SEK M
2010
2009
Purchase price
- direct costs in connection with acquisitions
-
-
63
2
Purchase price including acquisition costs
-
- Less amount not yet paid
-
- ALess cash and cash equivalents at acquisition date
-
65
-53
-1
Total
-
11
Payments relating to previous years’ acquisitions
-
32
Total net payment in relation to the acquisitions
-
43
To make a new share issue possible, the General Meeting decided upon a decrease of the share
capital by 242 372 758.50 SEK, without cancelling the shares, to place in a fund for use as per
the General Meeting’s decision, and change of the share capital’s limits in the statutes.
Number of shares (000s)
of which
SEK M
Registrered
owned
Registrered
As at 01.01.09
Share saving program
New share issue
Reverse split
162 271
935
-
-32
-
-
484 056
-484 745
-677
of which
owned
185
-
-104
242
-
1
0
-
As at 31.12.09
161 582
226
323
As at 01.01.10
161 582
226
323
Share saving program
-
-7
-
-
-
-242
New share issue
4 847 455
2 423
Reverse split
-4 908 856
-214
-
As at 31 December 2010
100 181
4
2 504
1
-
1
0
-
1
In connection with the issue in December 2010, a difference arose between book value in equity
and paid in cash and cash equivalents per cash flow. The difference between reported value in
equity and cash flow in the Group and Parent Company consists of the following items:
NOTE 26 EQUITY
Currency exposure
The currency exposure related to investments in foreign subsidiaries amounts to SEK 2 563 M
(9 330) with the following distribution:
SEK M
2010
2009
Millions in respective currency
2010
2009
Newshare issue, gross added amount
Share issue costs
Tax, share issue costs (26.3%) 2 520
-137
36
2 517
-180
47
Euro
Danish kroner
Norwegian kroner
Polish zloty
5
317
1 447
207
11
358
6 202
405
New share issue, net after share issue costs,
adjusted for tax reported in equity
2 419
2 384
Non-cash regulated tax share issue costs per above
Share issue cash and cash equivalents not paid per 31 Dec
Unpaid share issue costs per 31 December
-36
-42
48
-47
6
New share issue, added capital net
2 389
2 343
Number of shares
On 1 January 2010, the number of shares was 161 581 839 of which 225 645 were held by the
Company, thus totalling 161 356 194 after reduction for repurchases. During 2010, there was a
new share issue of 4,847,455,170 shares, including the remainder of the preferential issue of 82
496 095 shares which were registered in January 2011, when a 50:1 reverse split was performed.
During the year, ordinary matching and premature termination of the share-savings program for
employees whose employment ended resulted in a reduction, resulted in a reduction of shares
by 7 165 (before the reverse split) which were transferred to the employees from the company’s
deposit account.
On 31 December 2010, the number of shares before the reverse split was 5,009,037,009 of which
218 480 were held by the Company, thus totalling 4 926 322 434 after reduction for repurchases.
On 31 December 2010, the number of shares after the 50:1 reverse split was thus 100,180,740 of
which 4 369 were held by the Company, thus totalling 100,176,371 after reduction for repurchases.
The booked value of the treasury shares as of 31 December 2010 was SEK 67 M (69).
The treasury shares are intended for use in the share-savings program. See also Note 5.
Average number of shares after deduction of treasury shares
(number of shares)
Number of shares reduced by treasury shares as of January 1
Opening balance adjusted for bonus issue element ( X 5,070605)
Opening balance also adjusted for 50:1 reverse split January 2011
New share issue effect of 21 December (95 299 182 shares)
Effect of matching share-saving program
161 356 194
818 173 524
16 363 470
2 233 102
72
Average number of shares for the year
18 596 644
As of 31 December 2010, employees owned 127 savings-shares (after reverse split) that had not
yet been matched. The dillution effect on the average number of shares is based on the forecasted
future number of matching shares in the share saving program.
76
Reserves
Change in other reserves consists of the following items.
Group, SEK M
Hedging reserve
Translation reserve
Total
Opening balance as per 01.01.09
-483
-124
-607
Cash flow hedges:
Valuation of interest swaps at fair value
-611
-
611
Tax on fair value gains
-161
-
-161
Transfers to income statement included in financial
revenues and costs
15
-
15
Tax on transfers to income statement -2
-
-2
Hedging of net investments:
Valuation of loan liabilities
-
-610
-610
Tax on valuation of loan liabilities
-
161
161
Translation of foreign subsidiaries
-
900
900
Closing balance as per 31.12.09
-20
327
307
-20
327
307
Cash flow hedges:
Valuation of interest swaps at fair value
-208
-
-208
Tax on fair value losses
55
-
55
Transfers to income statement included in financial
revenues and costs
160
-
160
Tax on transfers to income statement -42
-
-42
Hedging of net investments:
Valuation of loan liabilities
-
570
570
Tax on valuation of loan liabilities
-
-150
-150
Translation of foreign subsidiaries
-
-824
-824
Closing balance as per 31 December 2010
-55
-77
-132
77
QUARTERLY SUMMARY
OPERATING REVENUES (SEK M) Full year
2010 2009
Q 4
Q 3
Q 2
Q 1
Full year
Q 4
Q 3
Q 2
Q1
1 482
1 135
1 442
1 267
6 581
1 966
1 500
1 673
1 442
3 713
1 033
788
995
897
4 686
1 387
1 088
1 161
Sweden
1 690
519
366
438
367
2 173
781
452
538
Norway
1 427
323
283
411
410
1 732
392
438
432
Denmark
596
191
139
146
120
781
214
198
191
Voice Scandinavia
677
155
176
183
163
712
174
181
188
Sweden
547
127
142
147
131
583
141
150
155
Norway
130
28
34
36
32
129
33
31
33
1 050
402
470
178
Total
5 326
169
137
32
Finland/Poland
936
294
171
264
207
1 183
405
231
324
223
Finland
571
104
114
203
150
752
174
141
259
178
Poland
365
190
57
61
57
431
231
90
65
45
EBITDA (SEK M)
Total
605
409
-371
397
170
1 807
557
404
561
285
941
288
235
288
130
1 486
478
339
411
258
Voice Scandinavia
274
61
68
79
66
195
22
75
43
55
Finland/Poland
-498
81
-638
61
-2
129
88
17
34
-10
Other (Head office and
Group-wide projects)
-112
-21
-36
-31
-24
-3
-31
-27
73
-18
EBITDA-MARGIN
Total
11
28
-33
28
13
27
28
27
34
20
25
28
30
29
14
32
34
31
35
25
Voice Scandinavia
40
39
39
43
40
27
13
41
23
33
Finland/Poland
-53
28
-373
23
-1
11
22
7
10
-4
CONDENSED CONSOLIDATED INCOME STATEMENT (SEK M)
Operating revenues
5 326
1 428
1 135
1 442
1 267
6 581
1 966
1 500
1 673
1 442
operating costs
-9 502
-1 203
-5 894
-1 173
-1 232
-5 889
-1 625
-1 731
-1 258
-1 275
Operating income (EBIT)
Financial net
Earnings before tax
-4 176
279
-4 759
269
35
692
341
-231
415
167
-563
-344
-73
-93
-53
-460
-101
-83
-112
-164
-4 739
-65
-4 832
176
-18
232
240
-314
303
3
MULTI-YEAR SUMMARY
CONDENSED CONSOLIDATED INCOME STATEMENT (SEK M)
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Operating revenues
Operating income before depreciation and amortization (EBITDA)
Operating income after depreciation (EBIT)
Earnings before tax
5 326
605
-4 176
-4 739
6 581
1 807
692
232
6 645
2 064
410
-276
6 443
2 266
1 855
1 401
6 372
2 220
1 813
1 276
4 827
1 234
1 073
1 017
4 745
1 324
1 232
1 131
4 808
1 292
569
483
4 737
940
-327
-409
4 519
1 150
775
692
Net income for the year (attributable to shareholders of the parent company) -4 620
616
-315
1 305
1 054
917
CONDENSED CONSOLIDATED BALANCE SHEET (SEK M)
764
198
-764
453
12 879
4 241
2 422
4 822
707
1 827
4 726
521
1 908
4 657
508
2 155
6 141
686
2 425
19 542
7 356
7 155
7 320
9 252
4 634
-
11 618
3 290
1 879
-
2 424
3 053
2 367
-
2 491
2 297
3 713
-
2 377
1 230
4 977
2 739
1 536
Total equity and liabilities 10 587
17 192 16 620 18 467
18 213 19 542
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (SEK M)
Cash flow from current operations
372
1 402
1 331
1 631
1 402
1 007
-195
-299
-293
-540
-215
-5 141
-44
-1 083
-1 329
-2 119
-1 486
4 468
Cash flow from discontinued operations
-
-
-
1 118
69
78
7 356
7 155
7 320
9 252
1 016
-235
-769
4
1 355
-983
-366
-
490
-356
-436
-
738
-1 416
886
-
16
6
-302
208
Assets
Goodwill
6 494 12 088
11 374 12 508
12 267
Other non-current assets
2 350
3 147
3 236
3 759
3 882
Current assets
1 743
1 957
2 010
2 200
2 064
Total assets 10 587
17 192 16 620 18 467
18 213
Equity and liabilities
Equity (parent company shareholders)
3 469
6 109
2 197
4 051
5 120
Non controlling interests
-
3
17
13
-
4 516
8 341
11 379 11 628
10 146
Current liabilities
2 602
2 739
3 027
2 775
2 947
133
20
-291
90
78
-230
412
KEY DATA
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Operating margin - EBITDA, %
11
27
31
35
35
Operating margin - EBIT, %
-78
11
6
29
28
Cash Earnings continuing operations, SEK M
1 723
1 723
1 336
1 534
1 392
Cash Earnings, SEK M
161
1 723
1 336
1 723
1 472
Average equity
4 275
4 735
3 321
5 222
4 804
Return on equity, %
-108
13
-9
25
22
Interest-bearing net liabilities, SEK M
3 951
6 645
9 948 10 264
9 044
Debt/equity ratio, multiple
1,14
1,09
4,49
2,53
1,73
Equity/assets ratio, %
33
36
13
22
28
Equity/assets ratio, %
6,5
3,7
4,8
4,5
4,1
KEY DATA PER SHARE BEFORE DILUTION
59,05
-77,03 286,63
229,56
Net income for the year, SEK (attributable to shareholders of the parent company) *) -248,43
92,65
165,17
326,71 336,92
303,17
Cash Earnings continuing operations, SEK *)
)
8,66
165,17
326,71 378,44
320,59
Cash Earnings, SEK * 35,21 1893,02 2 723,51 5 023,72 5 654,24
Equity, SEK (parent company shareholders)**)
18 597 10 432
4 089
4 553
4 591
Average number of shares after repurchasing, 000s *)
Number of shares on the closing date after repurchasing, 000s **) 98 526 16 363 161 336 161 275 181 103
OTHER KEY DATA
Average number of full time employees
4 437
5 096
4 861
4 697
4 801
Number of full-time employees at year end
3 926
4 994
4 961
4 650
4 821
26
22
997
1 081
2 195
42
10 564
2,28
24
8,6
28
26
855
860
2 154
35
2 832
1,51
26
2,1
27
12
921
921
2 839
7
2 462
1,04
33
1,9
20
-7
503
503
4 618
-17
1 828
0
51
1,9
25
17
828
828
3 464
13
1 960
0,39
54
1,7
230,26
182,27
44,97
250,35 203,98 209,20
271,44 205,18 209,20
5 117,56 2 399,28 2 827,99
3 982
4 192
4 403
181 102 156 630 167 398
4 754
5 429
4 752
4 953
4 595
4 695
-171,04 110,52
112,61 202,02
112,61 202,02
4 214,98 5 649,87
4 467
4 099
176 181 176 181
4 168
4 117
3 606
4 151
*) Adjusted for reverse splits in July 2009 (4:1) and January 2011 (50:1) and the bonus issue element (X 5,07) in the share issue December 2010
**) Adjusted for reverse splits in July 2009 (4:1) and January 2011 (50:1)
Years 2004–2007 according to IFRS.
Years 2000–2003 according to previous Swedish accounting principles, not IFRS.
Major changes in Group composition
2004
• Acquisition of Gula Tidningen, Consolidation from April 2004.
2010
• Divestment Directories operations Finland including Suomi24 Oy.
2008
• Acquisition of Sentraali Oy, Finland, consolidation from October 2008.
2007
• Sale of WLW in Germany (classified as discontinued operation 2006–2007).
• Acquisition of KRAK in Denmark, Consolidation from June 2007.
2006
• Acquisition of Din Pris AS, Norway, Consolidation from February 2006.
• Acquisition of WebDir in Denmark, Consolidation from February 2006.
• Acquisition of Kataloger i Norr AB, Consolidation from June 2006.
2005
• Acquisition of Findexa, Norway, Consolidation from December 2005.
• Operations in Estonia, Latvia, Lithuania, Russia and Belarus were classified as of the second
quarter of 2005 and not included in operating revenue, EBITDA and EBIT for 2004–2006.
2003
• Acquisition of directory assistance Respons (name changed to Eniro 118 118). Consolidation
from May 2003.
2002
• Acquisition of directory operations in Tammerfors, Finland. Consolidation from October 2002.
2001
• Acquisition of Scandinavia Online. Consolidation from January 2002.
• Acquisition of Direktia, Finland. Consolidation from January 2002.
• Acquisition of Panorama Polska. Consolidation from April 2001.
• Acquisition of Windhager, Germany. Consolidation from January 2001. Discontinuation of
operations as of fourth quarter 2002.
2000
• Acquisition of Wer Liefert Was, Germany. Consolidation from January 2001.
79
CERTIFICATION BY THE BOARD OF
DIRECTORS AND THE PRESIDENT
The Board of Directors and the President declare that the
annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden and give a
fair view of the company’s financial position and the result of
its operations and that the administration report gives a fair
review of the development and performance of the business,
the position and the result of the company together with a
description of the principal risks and uncertainties that the
company faces. Furthermore, it is declared that the conso-
lidated annual accounts have been prepared in accordance
with Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of
international accounting standards and give a fair view of the
group’s financial position and the results of its operations and
that the consolidated administration report gives a fair review
of the development and performance of the business, the position and the result of the group together with a description
of the principal risks and uncertainties that the group faces.
Stockholm, March 24, 2011
Eniro AB (publ)
Lars Berg
Chairman of the Board of Directors
Barbara Donoghue
Member of the Board
Karin Forseke
Member of the Board
Thomas Axén
Member of the Board
Harald Strømme
Member of the Board
Mattias Miksche
Member of the Board
Simon Waldman
Member of the Board
Lina Alm
Member of the Board
Jonas Svensson
Member of the Board
Bengt Sandin
Member of the Board
Johan Lindgren
President and CEO
Our auditors’ report was rendered by March 24, 2011
80
Bo Hjalmarsson
Authorized Public Accountant
Partner in charge
Sten Håkansson
Authorized Public Accountant
AUDIT REPORT
TO THE ANNUAL MEETING OF THE
SHAREHOLDERS OF ENIRO AB (publ)
Corporate identity number 556588-0936
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the
board of directors and the managing director of Eniro AB
(publ.) for the year 2010. The annual accounts and the consolidated accounts of the company are included in the printed
version of this document on pages 34-83. The board of directors and the managing director are responsible for these
accounts and the administration of the company as well as
for the application of the Annual Accounts Act when preparing the annual accounts and the application of international
financial reporting standards IFRSs as adopted by the EU and
the Annual Accounts Act when preparing the consolidated
accounts. Our responsibility is to express an opinion on the
annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards in Sweden. Those standards require that
we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the accounts. An audit also includes assessing
the accounting principles used and their application by the
board of directors and the managing director and significant
estimates made by the board of directors and the managing
director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of
information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from
liability, we examined significant decisions, actions taken and
circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or
the managing director. We also examined whether any board
member or the managing director has, in any other way, acted
in contravention of the Companies Act, the Annual Accounts
Act or the Articles of Association. We believe that our audit
provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with
the Annual Accounts Act and give a true and fair view of the
company’s financial position and results of operations in accordance with generally accepted accounting principles in
Sweden. The consolidated accounts have been prepared in
accordance with international financial reporting standards
IFRSs as adopted by the EU and the Annual Accounts Act and
give a true and fair view of the group’s financial position and
results of operations. The statutory administration report is
consistent with the other parts of the annual accounts and the
consolidated accounts.
We recommend to the annual meeting of shareholders that
the income statements and balance sheets of the parent
company1) and the Group2) be adopted, that the profit of the
parent company be dealt with in accordance with the proposal in the statutory administration report and that the members of the board of directors and the managing director be
discharged from liability for the financial year.
Stockholm den 24 March 2011
PricewaterhouseCoopers AB
Bo Hjalmarsson
Partner in charge
Sten Håkansson
1) The Swedish financial statements board has decided that the company for the statement of comprehensive income shall prepare one separate statement over the components in profit or
loss and a second statement over the components in other comprehensive income. The auditor’s recommendation of adoption is limited to the statement over the components in profit or loss.
2) According to IAS 1.10, a complete set of financial statements includes the statement of financial position as at the end of the period and the statement of comprehensive income for the
period. According to IAS 1.10, a company may choose other titles than those used in IAS 1, for example balance sheet instead of statement of financial position as at the end of the period or
income statement instead of statement of comprehensive income for the period. In the auditor’s report, the auditor shall use the same title as used in the consolidated accounts. If a company
in accordance with IAS 1.81 b) presents its revenue- and expense-items in two statements, one statement over profit or loss and a second statement over other comprehensive income, the
auditor’s recommendation regarding adoption is limited to the statement over profit or loss.
81
ANNUAL GENERAL MEETING 2011
Time and place
The Annual General Meeting (AGM) of Eniro AB (publ) will be held Friday April 29, 2011 at 15.00 (CET) at Berns Salonger, Berzelii
Park in Stockholm.
Participation and Registration
Shareholders who wish to participate in the AGM must be registered in the share register maintained by Euroclear Sweden AB
on April 21 2011, and must notify the company of their intention to attend no later than 16.00 CET on April 21, 2011 via a form on
www.eniro.com or via telephoneor mail according to below.
Tel: Mail: +46 8 402 90 44
Eniro’s Annual General Meeting, Box 7832, SE-103 98 Stockholm
The registration shall include name, adress, personal identification number of corporate registration number and phone number,
as well as the number of assistants (maximum two) who will be participating.
Shares registered in the name of a nominee
In order to participate in the AGM, shareholders whose shares are registered in the name of a nominee must temporarily
re-register their shares in their own names well in advance of April 21, 2011.
Agents and proxy form
A shareholder not present in person at the AGM may excersise his or her voting rights through a representative with a written
and dated proxy, signed by the shareholder. Proxy forms can be obtained at Eniro’s website, www.eniro.com, or by phone
+46 8 553 311 92. The original proxy should be submitted in ample time prior to the AGM to Eniro at the address: Enrio AB, Corporate
Legal Affairs, SE-169 87 Stockholm. Representatives of a legal entity shall also submit a certified copy of the certificate of registration or equivalent authorization documents.
82
DEFINITIONS
Adjusted EBITDA
EBITDA excluding restructuring costs and other items
affecting comparability.
Interest-bearing net debt
Interest-bearing liabilities plus interest-bearing provisions less interest-bearing assets, excluding the market value of interest swaps.
Average equity
Based on the average of equity at the beginning and the end of the period for each quarter.
Interest-bearing net debt/EBITDA
Interest-bearing net debt divided by EBITDA.
Average number of shares for the period
Calculated as an average number of outstanding shares on a daily basis after redemption and repurchase.
Operating cash flow
Cash flow from operations and cash flow from investments excluding company acquisitions/divestments.
Cash Earnings per share
Cash earnings divided by the average number of shares for the period.
Operating revenues per share
Operating revenues divided by the average number of shares for the period.
Cash Earnings
Net income for the year plus re-entered depreciation and amortization plus re-entered impairment loss.
Organic growth
The change in operating revenues for the period adjusted for currency effects, changed publication dates, close down of white pages in Norway, acquisitions and divestments.
Debt/equity ratio
Interest-bearing net debt divided by equity.
Direct return (%)
Dividend for the fiscal year divided by the share price at the end of the period multiplied by 100.
Earnings before tax per share
Earnings before tax for the period divided by the average number of shares for the period.
EBIT
Operating income after depreciation, amortization and impairment.
P/E ratio
Share price at the end of the period divided by earnings per share for the period.
Return on equity (%)
Net income for the last 12 months divided by average equity multiplied by 100.
Total operating cost
Production-, sales-, marketing-, administration-, product- and development costs excluding depreciation,
amortization and impairment.
EBITDA marginal (%)
EBITDA divided by operating revenues multiplied by 100.
EBITDA
Operating income before depreciation, amortization and impairment.
Equity per share
Equity per share divided by the number of shares at the end of the period after redemption, repurchase and share issue.
Equity/assets ratio (%)
Equity divided by the balance sheet total multiplied by 100.
83
ADDRESSES
SWEDEN
NORWAY
Eniro AB, Eniro Sverige AB,
Eniro Gula Sidorna AB,
Din Del AB and Eniro 118 118 AB
SE-169 87 Stockholm
Eniro Norge AS
Olaf Helsets vei 5
P.O. Box 6705 Etterstad
N-0694 Oslo
Tel: +46 8 553 310 00
Fax: +46 8 585 097 25
Tel: +47 81 54 44 18
Fax: +47 22 77 10 01
[email protected]
www.eniro.com
Visiting address:
Gustav III:s boulevard 40
Solna, Stockholm
DENMARK
Eniro Danmark A/S
Sydmarken 44 A
DK-2860 Søborg
Tel: +45 88 38 38 00
Fax: +45 88 38 38 10
FINLAND
Oy Eniro Sentraali Ab
Valimotie 9–11
FI-00380 Helsinki
Tel: +358 290 100 100
Fax: +358 346 3452
POLAND
Eniro Polska Sp. Z o. o.
ul. Domaniewska 41
PL-02-672 Warszawa
Tel: +48 22 289 2000
Fax: +48 22 289 2001
84
Eniro should be everyone’s first choice for local search, by being a
leading search company in the Nordic media market. We are local search
specialists that help users find practically everything. Our services
include Internet and mobile search, printed directories and directory
assistance. We create value for companies and help people to search
and interconnect.

Eniro`s Annual Report 2010

Transcription

Similar documents

Norway Online

Golf Digest

PRICELIST

annual report 2001

Q2-2015 Presentation

medical tourism in poland - Medical Tourism Conference

cirque deluxe - Pim Pim Ace Management

200703142209en3 (4.33 MB PDF)

KVD Kvarndammen

200804022264-3 (2.16 MB PDF)

Eniro_ENG_low

Tour 2.

2014 - Bankgirot